NUH ÇİMENTO SANAYİ A.Ş.
AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL
STATEMENTS FOR THE
YEAR ENDED 31 DECEMBER 2018
AND INDEPENDENT AUDITOR’S REPORT
(CONVENIENCE TRANSLATION OF
THE REPORT AND THE CONSOLIDATED
FINANCIAL STATEMENTS ORIGINALLY
ISSUED IN TURKISH)
(CONVENIENCE TRANSLATION OF
INDEPENDENT AUDITOR’S REPORT ORIGINALLY ISSUED IN TURKISH)
INDEPENDENT AUDITOR'S REPORT
To the General Assembly
Nuh Çimento Sanayi A.Ş.
Istanbul
A) Report on the Audit of the Consolidated Financial Statements
1) Opinion
We have audited the consolidated financial statements of Nuh Çimento Sanayi A.Ş. (the “Company”)
and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position as
at 31 December 2018, and the consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended, and
notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at 31 December 2018, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with
Turkish Financial Reporting Standards (TFRS).
2) Basis for Opinion
We conducted our audit in accordance with the standards on auditing issued by Capital Markets Board
and the Standards on Independent Auditing (“SIA”) which is a part of Turkish Auditing Standards
published by the Public Oversight Accounting and Auditing Standards Authority (“POA”). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Group
in accordance with the Code of Ethics for Independent Auditors (“Code of Ethics”) published by the
POA, together with the ethical requirements that are relevant to our audit of the consolidated financial
statements. We have also fulfilled our other ethical responsibilities in accordance with these
requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
3) Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter How the matter was addressed in the audit
Revenue Recognition
Revenue is recognized in the consolidated
financial statements at the transaction price.
The transaction fee is the amount that the
entity expects to receive in return for
transferring the goods that it has committed
to the customer, except for the amounts
collected on behalf of third parties. When
the control of the goods is transferred to the
customers, the Group reflects the relevant
amount as revenue in the consolidated
financial statements.
The Group’s major revenue comprise of
cement sales.
Group determines the cement prices on a
customer basis. The invoices are issued
based on the agreed upon prices with the
customers however manual changes can be
made to these prices in the system which
create risk of misstatement in revenue
recognition.
Due the aforementioned reasons and taking
into consideration the significance of the
revenue in the consolidated financial
statements taken as a whole, revenue
recognition is defined as a key audit matter.
Disclosure of the revenue recognition
accounting policies and balances are
presented in Note 2 and 19.
We have performed the following audit procedures
in our audit of revenue:
We have reviewed internal controls on the revenue
recognition policy, determination of the unit prices,
sales and delivery terms to understand the Group’s
revenue recognition process. We have assessed the
design of the controls is accurate and tested the
implementation of such internal controls.
We have traced and agreed the prices per selected
invoices to the agreed upon prices with the
customers.
We have recalculated the revenue by using the
Group’s approved unit prices and sales amount.
We have reviewed the selected customer and related
party sales agreements. Confirmation letters obtained
from the selected customers and transactions were
traced and agreed to the supporting documents on a
sampling basis.
All of accounting records are analyzed via our
digitally tools within the scope of our audit.
Sufficient audit evidence has been provided that the
transactions recognized as revenue are recorded
accurately and timely recorded in the correct period.
In addition, we have assessed the completeness of
the disclosure requirements under TFRS 15
regarding to revenue recognition and reviewed the
explanations disclosed in Note 2.
Key Audit Matter How the matter was addressed in the audit
Determination of fair value of the
hydroelectric power plant and
impairment testing
The Group’s carrying value of its power
plant amounts to TL 74.155.392. The fair
value of the power plant is determined by
independent appraiser. The details of the
valuation is disclosed in Note 14. The
Group has not posted any impairment losses
in the accompanying consolidated financial
statements based on the aforementioned
valuation report and in accordance with
TAS 36 “Impairment of Assets”
Since, determination of the fair value of the
power plant includes significant estimates
and assumptions, valuation of the power
plant is designated as a key audit matter as
part of our audit.
We have performed the following audit procedures
in the assessment on fair value and impairment
review of the Groups power plant:
We have assessed the competence, independence and
the professional certification of the independent
valuation appraiser assigned by the Group
management within the scope of our audit.
We have reviewed the appropriateness of the
valuation methods used by the independent valuation
appraiser in the valuation report of the power plant.
Audit of the validity of the key assumptions used by
the related valuation experts is within the scope of
our independent audit.
Valuation reports of the independent valuation
appraisers involve significant judgements alternative
estimations and valuation methods. We have
performed sensitivity analysis to conclude that value
of the power plant is within and acceptable range by
means of discussion per discussion with internal
appraiser.
In addition, we have assessed the completeness and
appropriateness of the information disclosed in the
consolidated financial statements taking into
consideration the importance of the information to
the users of the financial statements.
4) Responsibilities of Management and Those Charged with Governance for the
Consolidated Financial Statements
Group Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with TFRS, and for such internal control as management determines is necessary
to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
5) Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Responsibilities of independent auditors in an independent audit are as follows:
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with the standards on auditing issued by Capital
Markets Board and SIA will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with the standards on auditing issued by Capital Markets Board and
SIA, we exercise professional judgment and maintain professional skepticism throughout the audit.
We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion
(The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control).
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
B) Report on Other Legal and Regulatory Requirements
In accordance with paragraph four of the Article 398 of the Turkish Commercial Code No. 6102
(“TCC”), the auditor’s report on the system and the committee of early detection of risk has been
submitted to the Board of Directors of the Company on 5 March 2019.
In accordance with paragraph four of the Article 402 of TCC, nothing has come to our attention that
may cause us to believe that the Group’s set of accounts and financial statements prepared for the
period 1 January - 31 December 2018 does not comply with TCC and the provisions of the Company’s
articles of association in relation to financial reporting.
In accordance with paragraph four of the Article 402 of TCC, the Board of Directors provided us all
the required information and documentation with respect to our audit.
The engagement partner on the audit resulting in this independent auditor’s report is Ali Çiçekli.
DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş.
Member of DELOITTE TOUCHE TOHMATSU LIMITED
Ali Çiçekli
Partner
İstanbul, 5 March 2019
INDEX Pages
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 1-2
CONSOLIDATED STATEMENT OF PROFIT OR LOSS 3
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME 4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 5
CONSOLIDATED STATEMENT OF CASH FLOWS 6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 7-95
NOTE 1 ORGANIZATION AND OPERATIONS OF THE GROUP 7-9
NOTE 2 BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS 10-42
NOTE 3 INTERESTS IN OTHER ENTITIES 43-44
NOTE 4 SEGMENT REPORTING 45
NOTE 5 RELATED PARTY TRANSACTIONS 46-47
NOTE 6 TRADE RECEIVABLES AND PAYABLES 47-49
NOTE 7 OTHER RECEIVABLES AND PAYABLES 50
NOTE 8 OTHER CURRENT AND NON-CURRENT ASSETS 50
NOTE 9 INVENTORIES 51
NOTE 10 PREPAID EXPENSES AND DEFERRED INCOME 51
NOTE 11 INVESTMENT PROPERTY 52-53
NOTE 12 PROPERTY, PLANT AND EQUIPMENT 54-56
NOTE 13 INTANGIBLE ASSETS 56-57
NOTE 14 GOODWILL 57
NOTE 15 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES 58-61
NOTE 16 EMPLOYEE TERMINATION BENEFITS 62-64
NOTE 17 OTHER PAYABLES AND EXPENSE ACCRUALS 65
NOTE 18 SHARE CAPITAL, RESERVES AND OTHER EQUITY ITEMS 65-66
NOTE 19 REVENUE 67
NOTE 20 ADMINISTRATIVE EXPENSES, MARKETING AND SALES EXPENSES
AND RESEARCH AND DEVELOPMENT EXPENSES 67-68
NOTE 21 EXPENSES BY NATURE 69
NOTE 22 INCOME AND EXPENSES FROM OPERATING ACTIVITIES 69-70
NOTE 23 INCOME AND EXPENSES FROM INVESTING ACTIVITIES 70
NOTE 24 FINANCE INCOME AND EXPENSE 71
NOTE 25 INCOME TAXES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) 71-76
NOTE 26 EARNINGS PER SHARE 76
NOTE 27 FINANCIAL INSTRUMENTS 77-79
NOTE 28 NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS 79-91
NOTE 29 FINANCIAL INSTRUMENTS (FAIR VALUE DISCLOSURES) 92-94
NOTE 30 DISCLOSURE OF OTHER MATTERS THAT MAY AFFECT CONSOLIDATED
FINANCIAL STATEMENTS SIGNIFICANTLY OR IS NECESSARY FOR
CONSOLIDATED FINANCIAL STATEMENTS TO BE CLEAR,
INTERPRETABLE AND COMPREHENSIBLE 94
NOTE 31 EVENTS AFTER THE BALANCE SHEET DATE 95
NOTE 32 DISCLOSURES OF CONSOLIDATED STATEMENT OF CASH FLOWS 95
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
(Amounts expressed in Turkish Lira (TL))
The accompanying notes from an integral part of these consolidated financial statements.
(Convenience translation of the report and the consolidated financial statements originally issued in Turkish) 1
Current Period Prior Period
31 December 31 December
Note 2018 2017
ASSETS
Current Assets 847.504.127 701.403.880
Cash and Cash Equivalents 32 236.929.104 153.725.346
Financial Investments 32 2.931.240 2.028.322
Trade Receivables 6 347.929.043 383.621.362
Trade receivables from related parties 5 56.459 149.351
Trade receivables from third parties 347.872.584 383.472.011
Other Receivables 7 6.255.876 6.042.710
Other receivables from related parties 5 172.166 -
Other receivables from third parties 6.083.710 6.042.710
Inventories 9 219.519.315 135.810.914
Prepaid Expenses 10 17.598.804 12.661.004
Current Income Tax Assets 25 2.216.673 384.455
Other Current Assets 8 14.124.072 7.129.767
Non-Current Assets 1.094.579.762 1.050.488.456
Other Receivables 1.498.627 1.208.092
Other receivables from third parties 7 1.498.627 1.208.092
Financial Investments 27 2.569.965 2.569.965
Investments in Associates 3 103.728.231 122.016.733
Investment Properties 11 208.087.453 210.694.814
Property, Plant and Equipment 12 709.230.530 632.114.142
Intangible Assets 45.164.066 46.761.928
Goodwill 14 17.348.274 17.348.274
Other Intangible Assets 13 27.815.792 29.413.654
Prepaid Expenses 10 9.505.614 7.751.601
Deferred Tax Assets 25 10.557.907 27.371.181
Other Non Current Assets 8 4.237.369 -
TOTAL ASSETS 1.942.083.889 1.751.892.336
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
(Amounts expressed in Turkish Lira (TL))
The accompanying notes from an integral part of these consolidated financial statements.
(Convenience translation of the report and the consolidated financial statements originally issued in Turkish) 2
Current Period Prior Period
31 December 31 December
Note 2018 2017
LIABILITIES AND EQUITY
Current Liabilities 504.941.306 415.896.699
Short-Term Bank Borrowings 27 267.453.210 127.156.091
Current Portion of
Long Term Borrowings 27 66.881.631 95.782.504
Trade Payables 6 119.542.522 112.764.236
Trade payables due to related parties 5 - 154
Trade payables due to third parties 119.542.522 112.764.082
Payables Related to Employee Benefits 16 5.549.666 6.898.287
Other Payables 8.699.635 7.395.488
Other payables due to third parties 7 8.699.635 7.395.488
Derivative Instruments 27 1.105.535 -
Deferred Income 10 13.948.785 43.038.976
Current Tax Liabilities 25 627.989 5.736.167
Short Term Provisions 17.428.664 14.425.844
Short Term Provision for
Employee Termination Benefits 16 4.672.370 3.560.589
Other Short Term Provisions 15 12.756.294 10.865.255
Other Current Liabilities 17 3.703.669 2.699.106
Non-Current Liabilities 295.202.831 209.960.340
Long-term bank borrowings 27 240.824.922 166.707.957
Long Term Provisions 37.438.664 34.296.180
Long term provisions for
employee benefits 16 32.463.426 30.158.300
Other Long Term Provisions 15 4.975.238 4.137.880
Deferred Tax Liability 25 16.939.245 8.956.203
EQUITY 1.141.939.752 1.126.035.297
Share Capital 18 150.213.600 150.213.600
Capital Adjustment Difference 18 39.338.145 39.338.145
Accumulated Other Comprehensive Income
or Expenses not to be Reclassified to Loss (6.335.069) (8.557.194)
- Loss on remeasurement of
defined benefit plans (6.340.781) (8.562.906)
- Revaluation Funds 5.712 5.712
Accumulated Other Comprehensive Income
or Expenses to be Reclassified to Profit 3.379.789 2.939.885
- Currency Translation Reserves 3.379.789 2.939.885
Other Reserves 18 402.060.907 389.023.120
Retained Earning's 403.158.394 403.169.750
Profit for the Year 150.123.986 149.907.991
TOTAL EQUITY 1.942.083.889 1.751.892.336
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2018
(Amounts expressed in Turkish Lira (TL))
The accompanying notes from an integral part of these consolidated financial statements.
(Convenience translation of the report and the consolidated financial statements originally issued in Turkish) 3
Current Period Prior Period
1 January- 1 January-
31 December 31 December
Note 2018 2017
Revenue 19 1.169.468.076 1.002.472.078
Cost of Sales (-) 19 (840.835.297) (761.307.762)
GROSS PROFIT 328.632.779 241.164.316
General Administrative Expenses (-) 20 (99.627.015) (84.671.435)
Marketing and Sales Expenses (-) 20 (25.263.374) (18.293.198)
Research and Development Expenses (-) 20 (5.841) (181.567)
Income from Operating Activities 22 61.360.555 20.455.932
Expenses from Operating Activities (-) 22 (48.515.520) (26.748.377)
OPERATING INCOME 216.581.584 131.725.671
Income from Investing Activities 23 27.630.515 26.988.454
Expenses from Investing Activities (-) 23 (5.783.608) (6.861.279)
Group's Share in Profit of
Investment in Associates 3 9.719.236 31.104.169
PROFIT BEFORE FINANCE EXPENSES 248.147.727 182.957.015
Financial Income 24 103.151.544 48.373.860
Financial Expenses (-) 24 (154.165.563) (74.260.839)
PROFIT BEFORE TAX 197.133.708 157.070.036
Tax Expenses (47.009.722) (7.162.045)
Current Tax Expense 25 (22.770.156) (27.353.635)
Deferred Tax (Expense) / Income 25 (24.239.566) 20.191.590
NET PROFIT 150.123.986 149.907.991
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
(Amounts expressed in Turkish Lira (TL))
The accompanying notes from an integral part of these consolidated financial statements.
(Convenience translation of the report and the consolidated financial statements originally issued in Turkish) 4
Current Period Prior Period
1 January- 1 January-
31 December 31 December
Dipnot 2017 2016
NET PROFIT 150.123.986 149.907.991
OTHER COMPREHENSIVE INCOME / (EXPENSES)
Items that will not be reclassified subsequently to profit or (loss) 2.777.656 824.189
Gain on Remeasurement of Defined Benefit Plans 16 2.783.749 605.430
(Loss) / Gain on Remeasurement of Defined Benefit Plans
of Investment in Associates (6.093) 218.759
Tax expenses that will not be reclassified
subsequently to profit or (loss) (555.531) (164.838)
Tax expense from Loss on Remeasurement of
Defined Benefit Plans25
(556.750) (121.086)
Tax (Expense) / Income from Loss on
Remeasurement of Defined Benefit Plans of
Investment in Associates 25 1.219 (43.752)
Items that will be reclassified subsequently to profit or loss 439.904 198.756
Currency Translation Differences 439.904 198.756
OTHER COMPREHENSIVE INCOME / (EXPENSES) 2.662.029 858.107
TOTAL COMPREHENSIVE INCOME 152.786.015 150.766.098
Net Profit Attributable To: 150.123.986 149.907.991
Non-controlling interests - -
Owners of the company 150.123.986 149.907.991
Total Comprehensive Income Attributable To: 152.786.015 150.766.098
Non-controlling interests - -
Owners of the company 152.786.015 150.766.098
Earnings per Share 26 1,00 1,00
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
(Amounts expressed in Turkish Lira (TL))
The accompanying notes from an integral part of these consolidated financial statements.
(Convenience translation of the report and the consolidated financial statements originally issued in Turkish) 5
Accumulated Other
comprehensive income or
expenses that will be
reclassified subsequently
to profit or loss
Share
Capital
Capital
Adjustment
Difference
Gain / (loss) on
remeasurement of
defined benefit plans
Property
revaluation
reserves
Currency
Translation Differences
Other capital
reserve
Prior
Years' Profit
Profit for
the Year Total
Balance at 1 January 2017 150.213.600 39.338.145 (9.222.257) 5.712 2.741.129 361.488.129 390.294.416 175.465.839 1.110.324.713
Transfers - - - - - 27.534.991 147.930.848 (175.465.839) -
Total comprehensive income - - 659.351 - 198.756 - - 149.907.991 150.766.098
Effects of disposal of subsidiary - - - - - - 136.726 - 136.726
Dividends - - - - - - (135.192.240) - (135.192.240)
Balance at 31 December 2017
(Previously Reported)150.213.600 39.338.145 (8.562.906) 5.712 2.939.885 389.023.120 403.169.750 149.907.991 1.126.035.297
- - - - - - (1.689.320) - (1.689.320)
Balance at 1 January 2018
(As restated) 150.213.600 39.338.145 (8.562.906) 5.712 2.939.885 389.023.120 401.480.430 149.907.991 1.124.345.977
Transfers - - - - - 13.037.787 136.870.204 (149.907.991) -
Total comprehensive income - - 2.222.125 - 439.904 - - 150.123.986 152.786.015
Dividends - - - - - - (135.192.240) - (135.192.240)
Balance at 31 December 2018 150.213.600 39.338.145 (6.340.781) 5.712 3.379.789 402.060.907 403.158.394 150.123.986 1.141.939.752
Accumulated other comprehensive
income or expenses that
will not be reclassified subsequently
to profit or loss Retained Earnings
Effects of Change
in Accounting Policy (Note: 2.4)
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
(Amounts expressed in Turkish Lira (TL))
The accompanying notes from an integral part of these consolidated financial statements.
(Convenience translation of the report and the consolidated financial statements originally issued in Turkish) 6
Current Period Prior Period
1 January- 1 January-
31 December 31 December
Note 2018 2017
A. Cash flows from operating activities
Profit for the period 150.123.986 149.907.991
Cash flows from operating activities
- Adjustments related to depreciation and amortisation 11-12-13 75.118.367 67.806.856
- Adjustments related to doubtful receivables 6 14.925.785 1.088.980
- Adjustments related to uncollectable receivables 20 3.745.114 -
- Adjustments related to legal claims 15 4.050.592 2.127.457
- Adjustments related to land restoration 15 837.358 (1.758.061)
- Adjustments related to impairment of goodwill 14 - 1.718.793
- Adjustments related to impairment of investment properties 11 251.852 -
- Adjustments related to current tax expense 25 47.009.722 7.162.045
- Adjustments related to unrealized foreign exchange losses 23.173.832 9.541.225
- Adjustments related to interest income 24 (17.799.837) (8.942.521)
- Adjustments related to employee termination benefits and unused vacation 11.480.970 10.583.268
- Adjustments related to interest expense 24 69.203.484 33.108.238
- Adjustments related to derivative instruments 24 1.105.535 -
- Gain on sale or disposal of property, plant and equipment 23 (3.907.047) (6.324.569)
- Adjustments related to unpaid dividends from equity investments 3 (9.719.236) (31.104.169)
369.600.477 234.915.533
Movements in working capital
- Adjustments related to increase/decrease in inventories (125.773.870) (41.806.206)
- Adjustments related to increase/decrease in trade receivables 17.021.420 (89.320.153)
- Adjustments related to increase/decrease in other receivables
from operating activities (20.259.406) (616.511)
- Adjustments related to increase/decrease in trade payables 6.778.286 29.684.929
- Adjustments related to increase/decrease in other payables
from operating activities (28.130.102) 22.687.594
Net cash generated by operating activities 219.236.805 155.545.186
Income taxes paid 25 (27.878.334) (28.057.284)
Legal claims paid 15 (2.159.553) (2.646.815)
Employee termination benefits paid 16 (5.280.314) (5.073.287)
183.918.604 119.767.800
B. Cash flows from investing activities
Dividends received from associates 26.753.448 23.208.434
Purchases of property, plant and equipment
and intangible assets 12-13 (111.348.925) (157.825.615)
Income from sale of property, plant and equipment
and intangible assets 9.602.960 10.578.936
Purchases of investment property 11 (1.420.000) (5.338.426)
Sales of investment property 11 857.097 -
Effects of disposal of subsidiary - 136.726
(75.555.420) (129.239.945)
C. Cash flows from financing activities
Dividend paid (135.192.240) (135.192.240)
Interest paid (65.180.623) (30.079.237)
Cash input / (outflow) from bank loans 158.316.518 225.343.033
Interest received 18 17.799.837 8.942.521
(24.256.508) 69.014.077
NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 84.106.676 59.541.932
D. CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR 32 155.753.668 96.211.736
CASH AND CASH EQUIVALENTS AT THE END OF YEAR (A+B+C+D) 32 239.860.344 155.753.668
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
7
1. ORGANIZATION AND OPERATIONS OF THE GROUP
Nuh Çimento Sanayi A.Ş. (“the Company”) and its subsidiaries are joint stock and limited liability
companies and their principal activities are production of various types of cement, lime, ready-mixed
concrete, gas concrete, machinery and spare parts, power generation, transportation, real estate and
marketable securities management.
The address of the Company is 19 Mayıs Mah. İnönü Cad. No:94 Kadıköy Kozyatağı / İstanbul.
The Company is registered to the Capital Markets Board (CMB) and 15,92% of its shares are being
traded on Borsa Istanbul (BIST) since 24 February 2000.
Segment information about the Group’s continuing operations are presented in Note 3.
As of 31 December 2018 and 2017, the average number of personnel is categorized as follows;
1 January- 1 January-
31 December 2018 31 December 2017
White collar 968 979
Blue collar 330 324
1.298 1.303
The Group’s main shareholders and controlling parties are Nuh Ticaret Sanayi ve Ticaret A.Ş. and
Partaş Tekstil İnşaat Sanayi ve Ticaret A.Ş.
31 December 31 December
Shareholders 2018 2017
Nuh Ticaret Sanayi ve Ticaret A.Ş. 44,13% 44,13%
Partaş Tekstil İnşaat Sanayi ve Ticaret A.Ş. 16,41% 15,99%
Traded on BIST 15,92% 13,86%
Other (*) 23,54% 26,02%
Total Shares 100% 100%
(*) Represents total of shares less than 5%.
Dividend Payable:
On 5 March 2019, the Group management proposes to pay dividends to the shareholders amounting to
TL 0.70 per share for the current year. Such dividends are subject to the annual meeting of the
shareholders by the shareholders and are not included in the financial statements as a liability. The
total amount of dividends to be paid is TL 105.149.520.
Approval of Consolidated Financial Statements:
The consolidated financial statements have been approved for issue by the Board of Directors 5 March
2019. General Assembly has power to change Group’s consolidated financial statements.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
8
1. ORGANIZATION AND OPERATIONS OF THE GROUP (cont’d)
The Company and its subsidiaries within the scope of consolidation will then be referred as “Group”.
The details of the Company’s subsidiaries are as follows:
Subsidiaries:
Nuh Beton A.Ş.
Nuh Beton started to produce ready-mixed concrete in 1987 at the Bostancı facility as a separate entity
of Nuh Çimento parallel to the developments in concrete industry, new facilities were established in
Hereke, B. Bakkalköy, İkitelli, Büyükçekmece and İzmit.
In order to get better organized in the rapid developing ready-mixed concrete sector, the facilities
separated from Nuh Çimento and Nuh Beton was established in 1995. Besides, 87 thousand m²
shopping center and hotel constructions on the land owned by the Company in Bostancı were finalized
in and carried to financial statements as investment property. As of 31 December 2018 and 2017, Nuh
Beton A.Ş. has shares in Ünye Çimento San ve Tic. A.Ş..
Nuh Yapı Ürünleri A.Ş.(Nuh Yapı)
A limestone manufacturing plant and an aerated concrete block (white brick) manufacturing plant
were established within Nuh Çimento in 1984 and 1996 with annual production capacities of 160.000
m³/year 160.000 ton/year, respectively.
The legal establishment of Nuh Yapı was realized in 1995. The Company started its operations with
two facilities stated above and machine factory which was a part of Nuh Çimento.
Nuh Yapı completed the construction of aerated concrete block production facility, in 2008 with an
annual capacity of 400.000 m³, which was started in 2007. Besides, the limestone production facility
whose investment started in 2007 was completed at the end of 2010 with an annual quicklime
production capacity of 212.000 tons.
Nuh Enerji Elektrik Üretim A.Ş. (Nuh Enerji)
Nuh Enerji was established in 2000 to deliver electricity mainly to Nuh Group companies in an
economic and safe manner. It started its operations in 2004 after transferring a 38 MW power
production plant which was established in 1999 for the same purpose within the structure of Nuh
Çimento The first unit with 60 MW capacity of the second power plant with a capacity of 120 MW
power was established in 2005 and the other unit of the power plant was established in 2009. While
the company operated with 3 natural gas power plants with a power of 158 MW, due to the increase
in the cost of natural gas-based production and price competition, the company discontinued its
production in the 38 MW production capacity and applied to Energy Market Regulatory Authority
(“EMRA”) for the cancellation of its license, which was cancelled as of August 31, 2014. Further, the
power plant with 120 MW power capacity has been reduced to 47 MW through application to EMRA,
and finally the license has been cancelled as of June 30, 2016.Kudret Enerji was established in
Yağmur River, Araklı, Trabzon. As of 25 February 2011, all of its shares belong to the group. Kudret
Enerji, which owns the 49-year production license of “Bangal Regulator and Kuşluk HES” with a
capacity of 17 MW, started production in May 2012. As of 29 April 2016, Kudret Enerji has merged
with Nuh Enerji.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
9
1. ORGANIZATION AND OPERATIONS OF THE GROUP (cont’d)
Subsidiaries (cont’d) :
Nuh Enerji Elektrik Üretim A.Ş. (Nuh Enerji) (devamı)
Nuh Enerji Elektrik Üretim A.Ş., which has fully owned by the Company, registered in Istanbul Trade
Registry Department with registration number 435157 applied to Energy Market Regulatory Authority
on August 10, 2017 with an application number BGNNM91A for merger process with the Company
with all of its assets and liabilities as a whole in accordance with “ Faciliated Merger” method. The
Company's merger process was approved by the Trade Registry Gazette on February 27, 2018 and on
February 28, 2018 the Company announced at the Public Disclosure Platform (KAP) to inform the
public that the merger process has been completed.
Nuh Gayrimenkul İnşaat A.Ş. (Nuh Gayrimenkul)
Nuh Gayrimenkul was established in 1997 for the purpose of ensuring efficient use of the real estate
within the structure of the group companies, of production and project preparation operations in the
construction sector. As of 31 December 2018 and 2017, Nuh Gayrimenkul has shares of Ünye
Çimento Sanayi ve Ticaret A.Ş..
Çim-Nak Taşımacılık Limited Şirketi (Çim-Nak)
Çim-Nak was established in 1979 to provide land and sea transportation services, run mineral ore
administration operations and realize sea logistics-transportation operations. Çim-Nak still provides
the mentioned and additional services to Nuh Çimento.
Navig Holding Trade B.V. (Navig)
Navig was established in 1997 in Netherlands with the 100% participation of Nuh Çimento to assist
the export-import operations of the group’s firms, finding long-term external credits for investments
and making securities investments.
Joint ventures and associates:
Torgoviy Port Ltd.
Torgoviy Port Ltd. was established in 2008 in the Russian Federation province of Rostov-on-Don for
the purpose of operating in port administration; cement sales, etc., with a total share capital of Ruble
121.732.238 in which the Company has become a shareholder at 50%. The share capital of Torgoviy
Port Ltd. is Ruble 190.526.000 and the Company’s shareholding rate is 50%.
Ünye Çimento Sanayi ve Ticaret A.Ş. (Ünye Çimento)
The Group has held shares of Ünye Çimento since 1997 and currently the nominal share capital of
Ünye Çimento is amounting to TL 123.586.411 and Nuh Beton and Nuh Gayrimenkul holds 40,03%
of its shares in total.
Ünye Çimento was established in 1969 in Ünye for the purpose of production and sales of clinker and
cement, and started its operations with an annual production capacity of 600.000 tons in 1974. Upon
the investments made, the clinker production capacity reached 1,5 million tons and the cement
grinding capacity reached 2,6 million tons per year. Ünye Çimento realizes its exports through Ünye
Port and the usage right of the port belongs to Ünye Çimento for a period of 49 years.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
10
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
2.1 Basis of preparation
Statement of Compliance
The consolidated financial statements and disclosures have been prepared in accordance with the
communique numbered II-14,1 “Communique on the Principles of Financial Reporting in Capital
Markets” (“the Communique”) announced by the Capital Markets Board (CMB) (hereinafter will be
referred to as “the CMB Accounting Standards”) on 13 June 2013 which is published on Official
Gazette numbered 28676.The accompanying consolidated financial statements and disclosures are
presented in accordance with the formats and by including the compulsory information announced by
the CMB dated 7 June 2013.
The accompanying consolidated financial statements have been prepared in accordance with Turkish
Financial Reporting Standards (“TFRS”) published by Public Oversight Accounting and Auditing
Standards Authority (“POA”) the supplementary information and the interpretations related to them.
The subsidiaries in foreign countries prepares their accounting and financial statements in their
currency and according to the laws and regulations of their countries. The Company maintains its books
of account in accordance with accounting principles set by Turkish Commercial Code ("TCC") and tax
legislation. Consolidated financial statements have been prepared on the historical cost basis except for
the fair value valuation of derivative financial instruments. In determining the historical cost, the fair value
of the amount paid for the assets is generally taken as the basis.
Currency Used
The financial statements of each subsidiaries of the Group's are presented in the currency of the
primary economic environment in which it operates (functional currency). The financial position and
operating results of each subsidiaries are expressed in TL which is the functional currency of the
Company and the presentation currency for the accompanying consolidated financial statements.
Inflation accounting
The financial statements of the Company and its Turkish subsidiaries for the periods before 1 January
2006 were adjusted to compensate for the effect of changes in the general purchasing power of the
Turkish Lira based on TAS 29 Financial Reporting in Hyperinflationary Economies. Turkish
Economy is accepted to come off its highly inflationary status as of 1 January 2006. Based on this
consideration, TAS 29 has not been applied in the preparation of the consolidated financial statements
since 1 January 2006. Amounts expressed in the measuring unit current at 31 December 2005 were
treated as the basis for the carrying amounts after 1 January 2006.
Comparative Information and Restatement of Prior Period Consolidated Financial Statements
The financial statements of the Company include comparative financial information to enable the
determination of the financial position and performance trends. In order to comply with the
presentation of the current period financial statements, comparative information is reclassified when
necessary.
In the current period, the Group has not made any reclassifications on prior period consolidated
financial statements.
Periodicity
The Group's activities are increasing in spring and summer, when construction demand is rising and
the construction industry is reviving.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
11
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.1 Basis of preparation (cont’d)
Basis of consolidation
The details of the Company and it’s subsidiaries at 31 December 2018 and 2017 are as follows:
Subsidiaries Location Currency
31 December
2018
31 December
2017
Nuh Beton A.Ş. Turkey TL 100% 100%
Nuh Yapı Ürünleri A.Ş. Turkey TL 100% 100%
Nuh Enerji Elektrik Üretim A.Ş. (**) Turkey TL 0% 100%
Çim-Nak Taşımacılık Limited Şirketi Turkey TL 98% 98%
Nuh Gayrimenkul İnşaat A.Ş. Turkey TL 100% 100%
Navig Holding Trade B.V. Netherlandsa Euro 100% 100%
Joint ventures and associates accounted
under equity method
Torgoviy Port Ltd. (*) Russia Ruble 50% 50%
Ünye Çimento Sanayi ve Ticaret A.Ş. Turkey TL 40,03% 40,03%
Share
(*) The Company's board of directors has decided to terminate its partnership on Torgoviy Port
Ltd. on May 11, 2011. The termination process of the partnership is still in progress as of December 31, 2018. Various lawsuits and counterclaims were brought to the judiciary in May and June 2012. As of 31 December 2018 and 2017, impairment provision has been booked for subsidiary amount in Torgoviy Port Ltd.
(**) The Company's merger process has been completed with all of its assets and liabilities as a
whole in accordance with “ Faciliated Merger” method and the Company announced at the
Public Disclosure Platform (KAP) to inform the public that the merger process has been
completed on February 28, 2018.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
12
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.1 Basis of Presentation (cont’d)
Basis of Consolidation (cont’d)
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company and its subsidiaries. Control is achieved when the Company:
has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the
investee when the voting rights are sufficient to give it the practical ability to direct the relevant
activities of the investee unilaterally. The Company considers all relevant facts and circumstances in
assessing whether or not the Company’s voting rights in an investee are sufficient to give it power,
including:
the size of the Company’s holding of voting rights relative to the size and dispersion of
holdings of the other vote holders;
potential voting rights held by the Company, other vote holders or other parties;
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Company has, or does not have,
the current ability to direct the relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases
when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated statement of profit or loss and
other comprehensive income from the date the Company gains control until the date when the
Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the
Company and to the non-controlling interests. Total comprehensive income of subsidiaries is
attributed to the owners of the Company and to the non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
13
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.1 Basis of Presentation (cont’d)
Basis of Consolidation (cont’d)
Changes in the Group’s ownership interests in existing subsidiaries
Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing
control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the
Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative
interests in the subsidiaries. Any difference between the amount by which the non-controlling interests
are adjusted and the fair value of the consideration paid or received is recognized directly in equity
and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is
calculated as the difference between (i) the aggregate of the fair value of the consideration received
and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including
goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously
recognised in other comprehensive income in relation to that subsidiary are accounted for as if the
Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to
profit or loss or transferred to another category of equity as specified/permitted by applicable TFRSs).
The fair value of any investment retained in the former subsidiary at the date when control is lost is
regarded as the fair value on initial recognition for subsequent accounting under TAS 39, when
applicable, the cost on initial recognition of an investment in an associate or a joint venture.
Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but is not control or
joint control over those policies.
A partnership is a joint venture in which entities with joint control in an arrangement have rights to the
net assets in the joint arrangement. Joint control is based on the control contract on an economic
activity. This control is deemed to exist when the decisions of the relevant activities require the parties
sharing the control to agree with the unanimity of votes.
The results and assets and liabilities of associates or joint ventures are incorporated in these
consolidated financial statements using the equity method of accounting, except when the investment,
or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with
TFRS 5. Under the equity method, an investment in associate or a joint venture is initially recognized
in the consolidated statement of financial position at cost and adjusted thereafter to recognize the
Group’s share of the profit or loss and other comprehensive income of the associate or a joint venture.
When the Group's share of losses of an associate or a joint venture exceeds the Group's interest in that
associate or a joint venture (which includes any long-term interests that, in substance, form part of the
Group's net investment in the associate or a joint venture), the Group discontinues recognizing its
share of further losses. Additional losses are recognized only to the extent that the Group has incurred
legal or constructive obligations or made payments on behalf of the associate or a joint venture.
Profits and losses arising from transactions between one of the Group companies and an associate of
the Group are eliminated at the rate of the Group's interest in the related associate or joint venture.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
14
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.2 Change in Accounting Policies
The Group has applied accounting standarts consistently with prior year. Significant changes in
accounting policies are applied retrospectively and prior period financial statements are adjusted
accordingly. There are not any changes in accounting policies in the current year. Applied accounting
standards are consistent with previous periods.
2.3 Change in Accounting Estimates and Errors
If changes in accounting policies are for only one period, changes are applied on the current year but if
the changes affect the future periods, changes are applied both on the current period and future periods
prospectively. There has been no significant change in the Group's accounting estimates during the
current year.
2.4 New and Revised Turkish Accounting Standards
New and amended TFRS Standards that are effective for the current year
TFRS 9 Financial Instruments
(a) Classification and measurement of financial assets
In the current year, the Group has applied TFRS 9 Financial Instruments (as revised in July 2014) and
the related consequential amendments to other TFRS Standards that are effective for an annual period
that begins on or after 1 January 2018. The transition provisions of TFRS 9 allow an entity not to
restate comparatives. As a result of the first-time adoption of TFRS 9, the cumulative effect due to the
first time adoption of TFRS 9 by the Group is recognised in retained earnings as of 1 January 2018 and
the comparatives haven’t been restated accordingly.
1) The classification and measurement of financial assets and financial liabilities,
2) Impairment of financial assets, and
3) General hedge accounting.
Details of these new requirements as well as their impact on the Group’s consolidated financial
statements are described below.
The Group has applied TFRS 9 in accordance with the transition provisions set out in TFRS 9.
The date of initial application ( the date on which the Group has assessed its existing financial assets
and financial liabilities in terms of the requirements of TFRS 9) is 1 January 2018. Accordingly, the
Group has applied the requirements of TFRS 9 to instruments that continue to be recognised as at 1
January 2018 and has not applied the requirements to instruments that have already been derecognised
as at 1 January 2018.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
15
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.4 New and Revised Turkish Accounting Standards (cont’d)
New and amended TFRS Standards that are effective for the current year (cont’d)
TFRS 9 Financial Instruments (cont’d)
(a) Classification and measurement of financial assets (cont’d)
All recognised financial assets that are within the scope of TFRS 9 are required to be measured
subsequently at amortised cost or fair value on the basis of the entity’s business model for managing
the financial assets and the contractual cash flow characteristics of the financial assets. Specifically:
• debt instruments that are held within a business model whose objective is to collect the
contractual cash flows, and that have contractual cash flows that are solely payments of
principal and interest on the principal amount outstanding, are measured subsequently at
amortised cost;
• debt instruments that are held within a business model whose objective is both to collect the
contractual cash flows and to sell the debt instruments, and that have contractual cash flows that
are solely payments of principal and interest on the principal amount outstanding, are measured
subsequently at fair value through other comprehensive income (FVTOCI);
• all other debt investments and equity investments are measured subsequently at fair value
through profit or loss (FVTPL).
Despite the aforegoing, the Group may make the following irrevocable election/designation at initial
recognition of a financial asset:
• the Group may irrevocably elect to present subsequent changes in fair value of an equity
investment that is neither held for trading nor contingent consideration recognised by an
acquirer in a business combination in other comprehensive income; and
• the Group may irrevocably designate a debt investment that meets the amortised cost or
FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an
accounting mismatch.
When a debt investment measured at FVTOCI is derecognised, the cumulative gain or loss previously
recognised in other comprehensive income is reclassified from equity to profit or loss as a
reclassification adjustment. When an equity investment designated as measured at FVTOCI is
derecognised, the cumulative gain or loss previously recognised in other comprehensive income is
subsequently transferred to retained earnings.
Debt instruments that are measured subsequently at amortised cost or at FVTOCI are subject to
impairment. See (b) below.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
16
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.4 New and Revised Turkish Accounting Standards (cont’d)
New and amended TFRS Standards that are effective for the current year (cont’d)
TFRS 9 Financial Instruments (cont’d)
(b) Impairment of financial assets
In relation to the impairment of financial assets, TFRS 9 requires an expected credit loss model as opposed to an incurred credit loss model under TAS 39. The expected credit loss model requires the Group to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial assets. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised. Specifically, TFRS 9 requires the Group to recognise a loss allowance for expected credit losses on Trade receivables and receivables from related parties.
In particular, TFRS 9 requires the Group to measure the loss allowance for a financial instrument at an
amount equal to the lifetime expected credit losses (ECL) if the credit risk on that financial instrument
has increased significantly since initial recognition, or if the financial instrument is a purchased or
originated credit‑impaired financial asset.
If the credit risk on a financial instrument has not increased significantly since initial recognition
(except for a purchased or originated credit‑impaired financial asset), the Group is required to measure
the loss allowance for that financial instrument at an amount equal to 12‑months ECL. TFRS 9 also
requires a simplified approach for measuring the loss allowance at an amount equal to lifetime ECL
for trade receivables, contract assets and lease receivables in certain circumstances.
Impairment
Financial assets measured at amortized cost will be subject to the impairment provisions of TFRS 9.
The Group applies the simplified approach to recognize lifetime expected credit losses for its trade
receivables, receivables from related parties, finance lease receivables and contract assets as required
or permitted by TFRS 9.
To measure the expected credit losses, trade receivables and receivables from related parties have been
grouped based on shared credit risk characteristics and the days past due.
(c) Classification and measurement of financial liabilities
A significant change introduced by TFRS 9 in the classification and measurement of financial
liabilities relates to the accounting for changes in the fair value of a financial liability designated as at
FVTPL attributable to changes in the credit risk of the issuer.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
17
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.4 New and Revised Turkish Accounting Standards (cont’d)
New and amended TFRS Standards that are effective for the current year (cont’d)
TFRS 9 Financial Instruments (cont’d)
(c) Classification and measurement of financial liabilities (cont’d)
Specifically, TFRS 9 requires that the changes in the fair value of the financial liability that is
attributable to changes in the credit risk of that liability be presented in other comprehensive income,
unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive
income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value
attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss, but
are instead transferred to retained earnings when the financial liability is derecognised. Previously,
under TAS 39, the entire amount of the change in the fair value of the financial liability designated as
at FVTPL was presented in profit or loss.
The application of TFRS 9 has had no impact on the classification and measurement of the Group’s
financial liabilities.
Please refer to (e) below for further details regarding the change in classification upon the application
of TFRS 9.
Impact of adoption
Adjustments arising from the new accounting policies are recognised as cumulative catch up
adjustment in the opening retained earnings balance as of 1 January 2018.
On 1 January 2018 (the date of initial application of TFRS 9), the group’s management has assessed
which business models apply to the financial assets held by the group and has classified its financial
instruments into the appropriate TFRS 9 categories.
The main effects resulting from this reclassification are as follows:
Previously
As Restated Reported
1 January 31 December
2018 TFRS 9 2017
Cash and Cash Equivalents 153.107.105 (618.241) 153.725.346
Trade Receivables 382.173.006 (1.448.356) 383.621.362
Deferred Tax Assets 27.825.832 454.651 27.371.181
Retained Earning's 401.557.804 (1.611.946) 403.169.750
Accumulated Losses
Investments in Associates (77.374) (77.374) -
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
18
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.4 New and Revised Turkish Accounting Standards (cont’d)
New and amended TFRS Standards that are effective for the current year (cont’d)
TFRS 9 Financial Instruments (cont’d)
(d) Presentation changes due to initial implementation of TFRS 9
Impact of adoption
As a result of the adoption of TFRS 9, some changes have occurred in the accounting policies as of 1
January 2018 and some amendments have been made to the financial statements.Applied accounting
policies are explained in Note 2.5. In accordance with the transition clauses of TFRS 9, prior year
consolidated financial statements have not been restated.
The impact on the Group’s retained earnings as at 1 January 2018 is as follows:
1 January
2018
Retained earnings as of 31 December 2017 403.169.750
Increase in provision for doubtful trade receivables related to trade receivables (1.129.718)
Increase in provision for doubtful trade receivables related
to time and demand deposits
Increase in provision for doubtful trade receivables in equity investments (77.374)
Total effect of previous year adjustments in accordance with TFRS 9 (1.689.320)
As of 1 January 2018 revised retained profits 401.480.430
(482.228)
Classification and measurement
Changes in the classification of financial assets and lialibities are summarized below. These
classifications do not have any effect on the measurement of financial assets other than the financial
investments account group.
Financial Assets
Previous classification
according to TAS 39
New classification according to
TFRS 9
Cash and Cash
Equivalents
Loans and Receivables
Financial assets measured at
amortized cost
Trade Receivables
Loans and Receivables
Financial assets measured at
amortized cost
Trade receivables from
Related Parties Loans and Receivables
Financial assets measured at
amortized cost
Other Receivables
Loans and Receivables
Financial assets measured at
amortized cost
Other Financial Assets
Financial Assets
Available for Sale
Changes in fair value recognised in
other comprehensive income
Finansal Yükümlülükler Loans and Receivables
Financial assets measured at
amortized cost
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
19
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.4 New and Revised Turkish Accounting Standards (cont’d)
New and amended TFRS Standards that are effective for the current year (cont’d)
TFRS 15 Revenue from Contracts with Customers
Impact on the Consolidated Financial Statements
In the current year, the Group has applied TFRS 15 Revenue from Contracts with Customers which is
effective for an annual period that begins on or after 1 January 2018. TFRS 15 introduced a 5‑step
approach to revenue recognition. Far more prescriptive guidance has been added in TFRS 15 to deal
with specific scenarios. Details of the new requirements as well as their impact on the Group’s
consolidated financial statements are described below.
TFRS 15 uses the terms ‘contract asset’ and ‘contract liability’ to describe what might more
commonly be known as ‘accrued revenue’ and ‘deferred revenue’, however the Standard does not
prohibit an entity from using alternative descriptions in the statement of financial position.
The Group’s accounting policies for its revenue streams are disclosed in detail in note 2.5 below.
Apart from providing more extensive disclosures for the Group’s revenue transactions, the application
of TFRS 15 has not had a significant impact on the financial position and/or financial performance of
the Group.
Amendments to TFRS 2 Classification and Measurement of Share-Based Payment Transactions
The amendments clarify the standard in respect of the share-based payment arrangement has a ‘net
settlement feature’, such an arrangement should be classified as equity-settled in its entirety, provided
that the share-based payment would have been classified as equity-settled had it not included the net
settlement feature. Amendments to TFRS 2 have no impact on the Group’s consolidated financial
statements.
Amendments to TAS 40 Transfers of Investment Property
The amendments to TAS 40:
Amends paragraph 57 to state that an entity shall transfer a property to, or from, investment property
when, and only when, there is evidence of a change in use. A change of use occurs if property meets,
or ceases to meet, the definition of investment property. A change in management’s intentions for the
use of a property by itself does not constitute evidence of a change in use.
The list of examples of evidence in paragraph 57(a) – (d) is now presented as a non-exhaustive list of
examples instead of the previous exhaustive list.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
20
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.4 New and Revised Turkish Accounting Standards (cont’d)
New and amended TFRS Standards that are effective for the current year (cont’d)
Annual Improvements to TFRS Standards 2014–2016 Cycle
TMS 28:Imporvement;
Clarifies that the election to measure at fair value through profit or loss an investment in an associate
or a joint venture that is held by an entity that is a venture capital organization, or other qualifying
entity, is available for each investment in an associate or joint venture on an investment-by-investment
basis, upon initial recognition.Annual improvements to TFRS Standards 2014-2016 cycle have no
impact on the Group’s consolidated financial statements.
TFRS Interpretation 22 Foreign Currency Transactions and Advance Consideration
The interpretation addresses foreign currency transactions or parts of transactions where:
there is consideration that is denominated or priced in a foreign currency;
the entity recognizes a prepayment asset or a deferred income liability in respect of that
consideration, in advance of the recognition of the related asset, expense or income; and
the prepayment asset or deferred income liability is non-monetary.
The Interpretations Committee came to the following conclusion:
The date of the transaction, for the purpose of determining the exchange rate, is the date of initial
recognition of the non-monetary prepayment asset or deferred income liability.
If there are multiple payments or receipts in advance, a date of transaction is established for
each payment or receipt.
New and revised TFRS Standards in issue but not yet effective
At the date of authorisation of these financial statements, The Group has not applied the following new
and revised TFRS Standards that have been issued but are not yet effective:
TFRS 16 Leases
Amendments to TAS 28 Long‑term Interests in Associates and Joint
Ventures
IFRIC 23 Uncertainty over Income Tax Treatments
TFRS 10 Consolidated Financial Statements Sale of Contribution of Assets between an Investor
and TAS 28 (amendments) and its Associate or Joint Venture
Amendments to TAS 19 Employee Plan Amendment, Curtailment or Settlement 1
Benefits
Annual Improvements to TFRS Amendments to TFRS 3 Business Combinations,
Standards 2015–2017 Cycle TFRS 11 Joint Arrangements, TAS 12 Income
Taxes and TAS 23 Borrowing Costs 1 1 Effective from periods on or after 1 January 2019.
The directors do not expect that the adoption of the Standards listed above will have a material impact on the consolidated financial statements of the Group in future periods, except as noted below:
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
21
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.4 New and Revised Turkish Accounting Standards (cont’d)
New and revised TFRS Standards in issue but not yet effective (cont’d)
General impact of application of TFRS 16 Leases
TFRS 16 provides a comprehensive model for the identification of lease arrangements and their
treatment in the financial statements for both lessors and lessees. TFRS 16 will supersede the current
lease guidance including TAS 17 Leases and the related Interpretations when it becomes effective for
accounting periods beginning on or after 1 January 2019. The date of initial application of TFRS 16
for the Group will be 1 January 2019.
In contrast to lessee accounting, TFRS 16 substantially carries forward the lessor accounting
requirements in TAS 17.
Impact of the new definition of a lease
The Group will make use of the practical expedient available on transition to TFRS 16 not to reassess
whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with
TAS 17 and IFRIC 4 will continue to apply to those leases entered or modified before 1 January 2019.
The change in definition of a lease mainly relates to the concept of control. TFRS 16 distinguishes
between leases and service contracts on the basis of whether the use of an identified asset is controlled
by the customer. Control is considered to exist if the customer has:
– The right to obtain substantially all of the economic benefits from the use of an identified asset;
and
– The right to direct the use of that asset.
The Group will apply the definition of a lease and related guidance set out in TFRS 16 to all lease contracts entered into or modified on or after 1 January 2019 (whether it is a lessor or a lessee in the lease contract).
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
22
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.4 New and Revised Turkish Accounting Standards (cont’d)
New and revised TFRS Standards in issue but not yet effective (cont’d)
Impact on Lessee Accounting
Operating leases
TFRS 16 will change how the Group accounts for leases previously classified as operating leases under TAS 17, which were off‑balance sheet.
On initial application of TFRS 16, for all leases (except as noted below), the Group will:
a) Recognise right‑of‑use assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of the future lease payments;
b) Recognise depreciation of right‑of‑use assets and interest on lease liabilities in the consolidated statement of profit or loss;
c) Separate the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the consolidated cash flow statement.
Lease incentives (e.g. rent‑free period) will be recognised as part of the measurement of the right‑of‑use assets and lease liabilities whereas under TAS 17 they resulted in the recognition of a lease liability incentive, amortised as a reduction of rental expenses on a straight‑line basis.
Under TFRS 16, right‑of‑use assets will be tested for impairment in accordance with TAS 36 Impairment of Assets. This will replace the previous requirement to recognise a provision for onerous lease contracts.
For short‑term leases (lease term of 12 months or less) and leases of low‑value assets (such as personal computers and office furniture), the Group will opt to recognise a lease expense on a straight‑line basis as permitted by TFRS 16.
As at 31 December 2018, the Group has no non‑cancellable operating lease commitments.
The Group assess the possible impacts of the application of the amendments on the Group’s
consolidated financial statements.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
23
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.4 New and Revised Turkish Accounting Standards (cont’d)
New and revised TFRS Standards in issue but not yet effective (cont’d)
Amendments to TAS 28 Long-term Interests in Associates and Joint Ventures
This amendment clarifies that an entity applies TFRS 9 Financial Instruments to long-term interests in
an associate or joint venture that form part of the net investment in the associate or joint venture but to
which the equity method is not applied.
TFRS Interpretation 23 Uncertainty over Income Tax Treatments
This interpretation addresses the determination of taxable profit (tax loss), tax bases, unused tax
losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under
TAS 12.
TFRS 10 Consolidated Financial Statements and TAS 28 (amendments) Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture
The amendments to TFRS 10 and TAS 28 deal with situations where there is a sale or contribution of
assets between an investor and its associate or joint venture. Specifically, the amendments state that
gains or losses resulting from the loss of control of a subsidiary that does not contain a business in a
transaction with an associate or a joint venture that is accounted for using the equity method, are
recognised in the parent’s profit or loss only to the extent of the unrelated investors’ interests in that
associate or joint venture.
Amendments to TAS 19 Employee Benefits Plan Amendment, Curtailment or Settlement
The amendments clarify that the past service cost (or of the gain or loss on settlement) is calculated by
measuring the defined benefit liability (asset) using updated assumptions and comparing benefits
offered and plan assets before and after the plan amendment (or curtailment or settlement) but
ignoring the effect of the asset ceiling (that may arise when the defined benefit plan is in a surplus
position).
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
24
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.4 New and Revised Turkish Accounting Standards (cont’d)
New and revised TFRS Standards in issue but not yet effective (cont’d)
Annual Improvements to TFRS Standards 2015–2017 Cycle
Annual Improvements to TFRS Standards 2015–2017 Cycle include amendments to TFRS 3 Business
Combinations and TFRS 11 Joint Arrangements in when a party that participates in, but does not have
joint control of, TAS 12 Income Taxes; income tax consequences of dividends in profit or loss, and
TAS 23 Borrowing Costs in capitalized borrowing costs.
The Group assess the possible impacts of the application of the amendments on the Group’s
consolidated financial statements.
2.5 Summary of Significant Accounting Policies
Related Party
A related party is a person or entity that is related to the entity that is preparing its financial statements.
a) A person or a close member of that person’s family is related to a reporting entity if that person:
i) has control or joint control over the reporting entity;
ii) has significant influence over the reporting entity; or
iii) is a member of the key management personnel of the reporting entity or of a parent of the
reporting entity.
b) An entity is related to a reporting entity if any of the following conditions applies:
(i) The entity and the reporting entity are members of the same group (which means that each
parent, subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint
venture of a member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third
entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either the
reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a
plan, the sponsoring employers are also related to the reporting entity.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the
key management personnel of the entity (or of a parent of the entity).
A related party transaction is a transfer of resources, services or obligations between a reporting entity
and a related party, regardless of whether a price is charged.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
25
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Revenue
Revenue is recognized in the consolidated financial statements at the transaction price. The transaction
fee is the amount that the entity expects to receive in return for transferring the goods or services that
it has committed to the customer, except for the amounts collected on behalf of third parties. When the
control of the goods or services is transferred to the customers, the Group reflects the relevant amount
as revenue in the consolidated financial statements.
In accordance with TFRS 15 Customer Contract Revenue Standard, effective from 1 January 2018, the
Group recognizes revenue in the consolidated financial statements in the five-step model below.
Identification of contracts with customers
Identification of performance obligations in contracts
Determining the transaction price in contracts
Distribution of transaction fee to performance obligations
Revenue recognition
The Group evaluates the cement and clinker it commits in each contract with the customers and
determines each commitment to transfer the goods or services in question as a separate performance
obligation. For each performance obligation, it is determined at the beginning of the contract that the
performance obligation will be fulfilled in time or at a certain time. If the Group transfers the control
of a good or service over time and thus fulfills the performance obligations related to the related sales
over time, the Group measures the proceeds on the fulfillment of the performance obligations
completely and takes the proceeds to the financial statements. The Company, as it fulfills or fulfills its
performance obligation by transferring a committed product or service to its customer, records the
transaction price corresponding to this performance obligation as revenue in its financial statements.
The goods or services are transferred when the goods or services are received (as soon as it received)
by the customers.The Group evaluates the transfer of control of the goods or services sold to the
customer;
ownership of the Group's right to collect goods or services,
the ownership of the legal property of the customer,
transfer of the possession of goods or services,
the ownership of significant risks and rewards arising from the ownership of the goods or
services,
takes into account the conditions for the customer to accept the goods or services.
Dividend and interest income:
Dividend income from investments is recognized when the shareholder's right to receive payment has
been established (provided that it is probable that the economic benefits will flow to the Group and the
amount of income can be measured reliably).Interest income from a financial asset is recognized when
it is probable that the economic benefits will flow to the Group and the amount of income can be
measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding
and at the effective interest rate applicable, which is the rate that exactly discounts estimated future
cash receipts through the expected life of the financial asset to that asset's net carrying amount on
initial recognition.
Rental income:
Rental income from investment properties is recognized on a straight-line basis over the term of the
relevant lease.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
26
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Revenue (cont’d)
Revenue Recognition Policy Applied until 31 December 2017
Revenue is measured at the fair value of the consideration received or receivable. Revenue from the
sale of goods is recognized when the entity has transferred to the buyer the significant risks and
rewards of ownership of the goods, when the entity retains neither continuing managerial involvement
to the degree usually associated with ownership nor effective control over the goods sold, when the
amount of revenue can be measured reliably, when it is probable that the economic benefits associated
with the transaction will flow to the entity, and when the costs incurred or to be incurred in respect of
the transaction can be measured reliably. Net sales are invoiced amounts of delivered goods excluding
sales returns. When the arrangement effectively includes a financing transaction, the fair value of the
consideration is determined by discounting all future receipts using an imputed rate of interest. The
difference between the fair value and the nominal amount of the consideration is recognized on an
accrual basis as financial income.
Sale of goods
The Group has transferred to the buyer the significant risks and rewards of ownership of the
goods;
The Group retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold;
The amount of revenue can be measured reliably;
It is probable that the economic benefits associated with the transaction will flow to the entity;
and
The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Inventories
Inventories are stated at the lower of cost and net realizable value. Net realizable value represents the
estimated selling price less all estimated costs of completion and costs necessary to make the sale.
When the net realizable value of inventory is less than cost, the inventory is written down to the net
realizable value and the expense is included in statement of income/(loss) in the period the write-down
or loss occurred. When the circumstances that previously caused inventories to be written down below
cost no longer exist or when there is clear evidence of an increase in net realizable value because of
changed economic circumstances, the amount of the write-down is reversed. The reversal amount is
limited to the amount of the original write-down.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
27
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Property, Plant and Equipment
Property, plant and equipment are carried at cost less accumulated depreciation and any accumulated
impairment losses. Land is not depreciated and carried at cost less accumulated impairment.
Properties in the course of construction for production, supply or administrative purposes are carried at
cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets,
borrowing costs capitalized in accordance with the Group’s accounting policy. Such properties are
classified to the appropriate categories of property, plant and equipment when completed and ready for
intended use. Depreciation of these assets, on the same basis as other property assets, commences
when the assets are ready for their intended use.
Except for land and construction in progress,depreciation is recognized so as to write off the cost or
valuation of assets, other than freehold land and properties under construction, less their residual
values over their useful lives, using the straight-line method. The estimated useful lives, residual
values and depreciation method are reviewed at the end of each reporting period, with the effect of any
changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the
disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group as lessee
Operating lease payments are recognized as an expense on a straight-line basis over the lease term,
except where another systematic basis is more representative of the time pattern in which economic
benefits from the leased asset are consumed. Contingent rentals arising under operating leases are
recognized as an expense in the period in which they are incurred.
Rental income from operating leases is recognized on a straight-line basis over the term of the relevant
lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognized on a straight-line basis over the lease term.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
28
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Intangible Assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less
accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Computer software
Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and
bring to use the specific software. These costs are amortized over their estimated useful lives.
Costs associated with developing or maintaining computer software programmes are recognized as an
expense as incurred. Costs that are directly associated with the development of identifiable and unique
software products controlled by the Group, and that will probably generate economic benefits
exceeding costs beyond one year, are recognized as intangible assets. Costs include the software
development employee costs and an appropriate portion of relevant overheads.
Derecognition of intangible assets
An intangible asset is derecognized on disposal, or when no future economic benefits are expected
from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the
difference between the net disposal proceeds and the carrying amount of the asset, are recognized in
profit or loss when the asset is derecognized.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
29
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Impairment of Tangible and Intangible Assets Other Than Goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and
intangible assets to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any). When it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be
identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are
allocated to the smallest group of cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested
for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset
for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-
generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an
impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a
revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or
sale, are added to the cost of those assets, until such time as the assets are substantially ready for their
intended use or sale.
All other borrowing costs are recognized in the statement of profit or loss in the period in which they
are incurred.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
30
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Financial Instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position
when the Group becomes a party to the contractual provisions of the instrument. Financial assets and
financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of
the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial liabilities at fair value through
profit or loss are recognised immediately in profit or loss.
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date
basis.
The Group classifies its financial assets as (a) Business model used for managing financial assets, (b)
financial assets subsequently measured at amortised cost, at fair value through other comprehensive
income or at fair value through profit or loss based on the characteristics of contractual cash flows.
The Company reclassifies all financial assets effected from the change in the business model it uses
for the management of financial assets. The reclassification of financial assets is applied prospectively
from the reclassification date. In such cases, no adjustment is made to gains, losses (including any
gains or losses of impairment) or interest previously recognized in the financial statements.
Classification of financial assets
Debt instruments that meet the following conditions are measured subsequently at amortised cost:
the financial asset is held within a business model whose objective is to hold financial assets
in order to collect contractual cash flows; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are measured subsequently at fair value through
other comprehensive income (FVTOCI):
the financial asset is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling the financial assets; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
By default, all other financial assets are measured subsequently at fair value through profit or loss
(FVTPL).
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
31
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Financial Instruments (cont’d)
Financial assets (cont’d)
Classification of financial assets (cont’d)
Despite the foregoing, the Group may make the following irrevocable election/designation at initial
recognition of a financial asset; the Group may irrevocably elect to present subsequent changes in fair
value of an equity investment in other comprehensive income if certain criteria are met.
Amortised cost and effective interest method
Interest income on financial assets carried at amortized cost is calculated using the effective interest
method. The effective interest method is a method of calculating the amortised cost of a debt
instrument and of allocating interest income over the relevant period. This income is calculated by
applying the effective interest rate to the gross carrying amount of the financial asset:
(a) Credit-impaired financial assets when purchased or generated. For such financial assets, the
Company applies the effective interest rate on the amortized cost of a financial asset based on the loan
from the date of the recognition in the financial statements.
(b) Non-financial assets that are impaired at the time of acquisition or generation but subsequently
become a financial asset that has been impaired. For such financial assets, the Company applies the
effective interest rate to the amortized cost of the asset in the subsequent reporting periods.
Interest income is recognised using the effective interest method for debt instruments measured
subsequently at amortised cost and at FVTOCI.
Interest income is recognised in profit or loss and is included in the “finance income – interest
income” line item (Note 24).
Foreign exchange gains and losses
The carrying amount of financial assets that are denominated in a foreign currency is determined in
that foreign currency and translated at the spot rate at the end of each reporting period. Specifically,
for financial assets measured at amortised cost that are not part of a designated hedging
relationship, exchange differences are recognised in profit or loss in the ‘other gains and
losses’ line item ;
for debt instruments measured at FVTOCI that are not part of a designated hedging
relationship, exchange differences on the amortised cost of the debt instrument are recognised
in profit or loss in the ‘other gains and losses’ line item. Other exchange differences are
recognised in other comprehensive income in the investments revaluation reserve;
for financial assets measured at FVTPL that are not part of a designated hedging relationship,
exchange differences are recognised in profit or loss in the ‘other gains and losses’ line item;
and
for equity instruments measured at FVTOCI, exchange differences are recognised in other
comprehensive income in the investments revaluation reserve.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
32
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Financial Instruments (cont’d)
Financial assets (cont’d)
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on investments in debt instruments
that are measured at amortised cost or at FVTOCI, lease receivables, trade receivables and contract
assets, as well as financial guarantee contracts. No impairment loss is recognised for investments in
equity instruments. The amount of expected credit losses is updated at each reporting date to reflect
changes in credit risk since initial recognition of the respective financial instrument.
The Group utilizes a simplified approach for trade receivables, contract assets and lease receivables
that does not have significant financing component and calculates the allowance for impairment
against the lifetime ECL of the related financial assets.
For all other financial instruments, the Group recognises lifetime ECL when there has been a
significant increase in credit risk since initial recognition. However, if on the other hand, the credit
risk on the financial instrument has not increased significantly since initial recognition, the Group
measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.
Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given
default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment
of the probability of default and loss given default is based on historical data adjusted by forward-
looking information as described above. As for the exposure at default, for financial assets, this is
represented by the assets’ gross carrying amount at the reporting date.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash
flows that are due to the Group in accordance with the contract and all the cash flows that the Group
expects to receive, discounted at the original effective interest rate.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the
asset expire, or when it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another entity.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
33
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Financial Instruments (cont’d)
Financial assets (cont’d)
Derecognition of financial assets (cont’d)
On derecognition of a financial asset measured at amortised cost, the difference between the asset's
carrying amount and the sum of the consideration received and receivable is recognised in profit or
loss. In addition, on derecognition of an investment in a debt instrument classified as at FVTOCI, the
cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified
to profit or loss. In contrast, on derecognition of an investment in equity instrument which the Group
has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously
accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is
transferred to retained earnings.
Financial liabilities
Financial liabilities are classified as at FVTPL on initial recognition. On initial recognition of
liabilities other than those that are recognised at FVTPL, transaction costs directly attributable to the
acquisition or issuance thereof are also recognised in the fair value.
A financial liability is subsequently classified at amortized cost except:
(a) Financial liabilities at FVTPL: These liabilities including derivative instruments are subsequently
measured at fair value.
(b) Financial liabilities arising if the transfer of the financial asset does not meet the conditions of
derecognition from the financial statements or if the ongoing relationship approach is applied: When
the Group continues to present an asset based on the ongoing relationship approach, a liability in
relation to this is also recognised in the financial statements. The transferred asset and the related
liability are measured to reflect the rights and liabilities that the Group continues to hold. The
transferred liability is measured in the same manner as the net book value of the transferred asset.
(c) A contingent consideration recognized in the financial statements by the entity acquired in a
business combination where TFRS 3 is applied: After initial recognition, the related contingent
consideration is measured as at FVTPL.
The Group does not reclassify any financial liability.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
34
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Financial Instruments (cont’d)
Financial liabilities (cont’d)
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are
discharged, cancelled or have expired. The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss.
Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest
rate and foreign exchange rate risks, including foreign exchange forward contracts, options and
interest rate swaps. Further details of derivative financial instruments are disclosed in Note 27.
Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is
recognised in profit or loss immediately unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition in profit or loss depends on the nature of the
hedge relationship.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. Derivatives are not offset in the financial statements unless the Group has both legal right and intention to offset. A derivative is presented as a non‑current asset or a non‑current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
Accounting Policy Applied for Financial Instruments until 31 December 2017
Financial assets
Financial assets are classified into the following specified categories: financial assets as ‘at fair value
through profit or loss’ (FVTPL), ‘held-to-maturity investments’, ‘available-for-sale’ (AFS) financial
assets and ‘loans and receivables’. The classification depends on the nature and purpose of the
financial assets and is determined at the time of initial recognition. Financial assets purchased and sold
regularly are recognised on the transaction date. Financial assets are recognised as at fair value on
initial recognition. On initial recognition of financial assets or financial liabilities that are not
recognised as at fair value through profit or loss, transaction costs directly attributable to the
acquisition of the relevant financial asset are added to the fair value.
Impairment on financial assets are recognised based on the realised credit loss model in the
consolidated financial statements.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
35
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Financial Instruments (cont’d)
Accounting Policy Applied for Financial Instruments until 31 December 2017 (cont’d)
Financial liabilities
Financial liability is recognised at fair value on initial recognition. During initial recognition of
financial liabilities that are not recognised as at fair value through profit or loss, transaction costs
directly attributable to the related financial liability are added to the fair value. Financial liabilities are
subsequently measured at amortized cost using the effective interest method plus the interest expense
recognized on an effective yield basis.
Derivative instruments and hedge accounting
Effective portion of changes in the fair value of derivatives that are designated as future cash flow
hedges are recognized directly in equity and the ineffective portion is recognized directly in profit or
loss.
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of
acquisition of the business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating
units (or groups of cash-generating units) that is expected to benefit from the synergies of the
combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or
more frequently when there is an indication that the unit may be impaired. If the recoverable amount
of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit
pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is
recognized directly in profit or loss in the consolidated [statement of profit or loss/statement of profit
or loss and other comprehensive income]. An impairment loss recognized for goodwill is not reversed
in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
36
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Foreign Currency Transactions
Foreign Currency Transactions and Balances
The individual financial statements of each Group entity are presented in the currency of the primary
economic environment in which the entity operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial position of each entity are expressed in TL,
which is the functional currency of the Company, and the presentation currency for the consolidated
financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than TL
(foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At
the end of each reporting period, monetary items denominated in foreign currencies are retranslated at
the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing at the date when the fair value was
determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are
not retranslated.
Exchange differences are recognized in profit or loss in the period in which they arise except for:
Exchange differences on foreign currency borrowings relating to assets under construction for
future productive use, which are included in the cost of those assets where they are regarded as
an adjustment to interest costs on those foreign currency borrowings;
Exchange differences on monetary items receivable from or payable to a foreign operation for
which settlement is neither planned nor likely to occur, which form part of the net investment
in a foreign operation, and which are recognized in the foreign currency translation reserve
and recognized in profit or loss on disposal of the net investment.
Financial Statements of Associates, Subsidiaries and Joint Ventures Operaitng in Other Countries
Assets and liabilities of the Group’s foreign operations, are presented in TL considering exchange
rates valid at the reporting date. Income and expenses are translated by using the average rate
calculated for the year when the transaction occured, unless significant fluctuation has happened in
exchange rates. In case of any significant fluctuation in exchange rates, the transaction is translated by
using the exchange rate at the transaction date. The translation difference is accounted under
comprehensive income as a component of equity.
Earnings per Share
Earnings per share is calculated by dividing the net consolidated profit for the year attributable to
ordinary shareholders by the weighted average number of ordinary shares outstanding.
Companies in Turkey can increase their share capital through distributing shares (bonus shares) from
retained earnings and differences arising from inflation adjustment in changes in equity to their current
shareholders on a prorate basis. When calculating profit per share, these bonus shares are recognized
as issued shares. Therefore, the weighted average of shares used in the calculation of profit/(loss) per
share is derived through retrospective application with respect to bonus shares.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
37
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Events after the Reporting Period
Events after the reporting period are those events that occur between the balance sheet date and the
date when the financial statements are authorized for issue, even if they occur after an announcement
related with the profit for the year or public disclosure of other selected financial information.
The Group adjusts the amounts recognized in its financial statements if adjusting events occur after the
balance sheet date.
Provisions, Contingent Assets and Liabilities
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of
a past event, it is probable that the Group will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the
present obligation at the end of the reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered
from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement
will be received and the amount of the receivable can be measured reliably.
Reporting of Financial Information by Segments
Operating segments of the Group; based on the activities for which revenue is obtained and separate financial information is available. In accordance to that, the financial information of companies producing and trading cement, concrete and building materials are shown in the "Construction and building materials" and the financial information of the companies producing and selling electric energy are shown under "Energy”. In addition to these two areas of activity, construction and construction materials have been shown in the activity group because the assets of Nuh Group companies, which are engaged in construction transportation and services, do not exceed 10% of the total assets of all operating segments of their assets.
Investment Property
Investment properties are properties held to earn rentals and/or for capital appreciation, including
property under construction for such purposes. Investment properties are carried at cost less
accumulated depreciation and any accumulated impairment losses. The carrying amount includes the
cost of replacing part of an existing investment property at the time that cost is incurred if the
recognition criteria are met; and excludes the costs of day to day servicing of an investment property.
Depreciation is provided on investment property on a straight line basis. The depreciation period for
investment property is 35-50 years.
An investment property is derecognized upon disposal or when the investment property is permanently
withdrawn from use and no future economic benefits are expected from disposal. Any gain or loss
arising on derecognition of the property is included in profit or loss in the period in which the property
is derecognized.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
38
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Taxation
Turkish tax legislation does not permit a parent company and its subsidiary to file a consolidated tax
return. Therefore, provisions for taxes, as reflected in the accompanying consolidated financial
statements, have been calculated on a separate-entity basis.
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit
before tax’ as reported in the consolidated statement of profit or loss because of items of income or
expense that are taxable or deductible in other years and it excludes items that are never taxable or
deductible. The Group’s current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases which are used in the
computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable
temporary differences. Deferred tax assets are recognized for all deductible temporary differences to
the extent that it is probable that taxable profits will be available against which those deductible
temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the
temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to control
the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with such investments and interests are only recognized to the extent that it is probable that
there will be sufficient taxable profits against which to utilize the benefits of the temporary differences
and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that
are expected to apply in the period in which the liability is settled or the asset realized, based on tax
rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow
from the manner in which the Group expects, at the reporting date, to recover or settle the carrying
amount of its assets and liabilities.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
39
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.5 Summary of Significant Accounting Policies (cont’d)
Deferred tax (cont’d)
Current and deferred tax for the period
Current and deferred tax are recognized as in profit or loss, except when they relate to items that are
recognized in other comprehensive income or directly in equity, in which case, the current and
deferred tax are also recognized in other comprehensive income or directly in equity respectively.
Employee Benefits
Termination and retirement benefits
Under Turkish law and union agreements, lump sum payments are made to employees retiring or
involuntarily leaving the Group. Such payments are considered as being part of defined retirement
benefit plan as per International Accounting Standard No. 19 (revised) “Employee Benefits” (“TAS
19”).
The retirement benefit obligation recognized in the consolidated statement of financial position
represents the present value of the defined benefit obligation. The actuarial gains and losses are
recognized in other comprehensive income.
Seniority incentive bonus
In accordance with the employee benefit named “seniority incentive premiums” provided by some
subsidiaries of the Group and the Company to their employees having certain working seniority in
order to enhance their loyalty to the jobs and employers; the benefits are provided as follows;
employees with 5 year work experience are paid for their 30 days wage, those with 10 year work
experience are paid for their 55 days of their gross wage, those with 20 year work experience are paid
for their 70 days wage, those with 25 or 30 year work experience are paid for their 75 days wage, for
each level of payment with their actual working wage in the month they complete the respective
seniority level in the mentioned range.
To calculate the provision for seniority incentive payments, the Group has considered the duration
passed for each employee as of the balance sheet date since their job entrance dates and booked a
liability for the discounted amount of the future payments as of the balance sheet date.
Profit-sharing and bonus plans
The Group recognizes a liability and an expense for bonuses and profit-sharing, based on a formula
that takes into consideration the profit attributable to the company’s shareholders after certain
adjustments. The group recognizes a provision where contractually obliged or where there is a past
practice that has created a constructive obligation.
Statement of Cash Flows
In statement of cash flows, cash flows are classified according to operating, investing and financing
activities.
Share Capital and Dividends
Common shares are classified as equity. Dividends on common shares are recognized in equity in the
period in which they are approved and declared
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
40
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.6 Critical Accounting Judgments and Key Sources of Estimation Uncertainty
Critical judgments in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, which are described in Note 2.5, management
has made the following judgments that have the most significant effect on the amounts recognized in the
consolidated financial statements (apart from those involving estimations, which are dealt with below).
Deferred taxes
Deferred tax assets and liabilities are recorded using substantially enacted tax rates for the effect of
temporary differences between book and tax bases of assets and liabilities. Currently, there are deferred
tax assets resulting from operating loss carry-forwards and deductible temporary differences, all of which
could reduce taxable income in the future. Based on available evidence, both positive and negative, it is
determined whether it is probable that all or a portion of the deferred tax assets will be realized. The main
factors which are considered include future earnings potential; cumulative losses in recent years; history
of loss carry-forwards and other tax assets expiring; the carry-forward period associated with the deferred
tax assets; future reversals of existing taxable temporary differences; tax-planning strategies that would, if
necessary, be implemented, and the nature of the income that can be used to realize the deferred tax asset.
The Group has not recognized deferred tax assets related to unused past years' losses in some companies,
as it is unclear whether the Group will benefit from the deferred tax assets resulting from taxable profit in
the future (since there is no opinion that a deferred tax asset could be recovered).In light of the evidence
obtained, the Group’s belief that taxable profit will be avaliable sufficient to utilize these deferred tax
assets, therefore all of the deferred tax assets are recognized.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance
sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year, are discussed below.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
41
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.6 Critical Accounting Judgments and Key Sources of Estimation Uncertainty
Key sources of estimation uncertainty (cont’d)
Impairment of goodwill
The Group performs impairment testing annually to assess whether any impairment provision is required
for goodwill in accordance with accounting policy stated in Note 2.5. The Group engaged with an
independent valuation company and the estimations used in the valuation report has been disclosed in
Note 14.
Useful lives of property, plant and equipment
The Group reviews the estimated useful lives of its property, plant and equipment at the end of each
reporting period. The Group takes into consideration the intended use of the property, plant and
equipment, the advancement in technology related to the particular type of property, plant and equipment
as well as other factors that may require management to extend or shorten the useful lives and the assets’
related depreciation.
Environmental rehabilitation and land restoration provision
The scope of the environmental obligations to be incurred in the future expected costs related to these
structures is to show a difficult to predict the property. The Group is dependent on the timing and
development of legal regulations with the scale of the continuing operations. As of the reporting
period of the Group, management is estimated provisions for doing the assessment of environmental
liabilities reflected in the consolidated financial statements.
Legal provisions
The Group has litigations due to labor cases and debt collection cases. The Group accounts provision
for litigations for those which are possible to create liabilities in future.
Employee termination benefits and seniority incentive bonus
Employee termination benefits and seniority incentive bonus are determined with actuarial
assumptions (discount rate, future salary increase and turnover rates) (Note 16).
Fair value of derivative instruments and other financial instruments
The Group calculates the fair values of financial instruments that do not have an active market by using
market data, using similar transactions, using the fair values of similar instruments and using discounted
cash flow analysis (Note 27 and 29).
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
42
2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cont’d)
2.6 Critical Accounting Judgments and Key Sources of Estimation Uncertainty (cont’d)
Key sources of estimation uncertainty (cont’d)
Impairment in financial assets
The loss allowances for financial assets are based on assumptions about risk of default and expected
loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the
impairment calculation, based on the Group’s past history, existing market conditions as well as
forward looking estimates at the end of each reporting period.
Calculation of loss allowance
When measuring ECL the Group uses reasonable and supportable forward looking information, which is
based on assumptions for the future movement of different economic drivers and how these drivers will
affect each other.
Loss given default is an estimate of the loss arising on default. It is based on the difference between the
contractual cash flows due and those that the lender would expect to receive, taking into account cash
flows from collateral and integral credit enhancements.
Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the
likelihood of default over a given time horizon, the calculation of which includes historical data,
assumptions and expectations of future conditions.
If the ECL rates on trade receivables between 1 and 3 months past due had been 1% higher (lower) as of
31 December 2018, the loss allowance on trade receivables would have been TL 101.861 (2017: TL
51.508 ) higher (lower).
If the ECL rates on trade receivables 90 days past due had been 1% higher (lower) as of 31 December
2018, the loss allowance on trade receivables would have been TL 57.705 (31 December 2017: TL 38.740
) higher (lower).
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
43
3. INTERESTS IN OTHER ENTITIES
a) Subsidiaries
Change in the Group’s ownership interest in a subsidiary:
The merger process of the Nuh Çimento A.Ş. and Nuh Enerji Elektrik Üretim A.Ş. ,which is a
subsidiary of the Nuh Çimento A.Ş. , has been completed by applying the "Faciliated Merger" method
as a whole with all assets and liabilities and the details of the merger are explained in Note 2.1. There
has been no change in the shares of the Company in other subsidiaries.
b) Associates
Details of material associates
As of 31 December 2018 and 2017, details of each of the Group’s material associates are as follows:
Joint ventures and associates
accounted under equity method Location Currency
31 December
2018
31 December
2017
Torgoviy Port Ltd. (*) Russia Ruble 50,00% 50,00%
Ünye Çimento Sanayi ve Ticaret A.Ş. Turkey TL 40,03% 40,03%
Share
All the associates stated above are accounted for using the equity method in these consolidated
financial statements.
31 December
2018
31 December
2017
Ünye Çimento 103.728.231 122.016.733
Torgoviy Port Ltd. 5.903.919 5.903.919
109.632.150 127.920.652
Impairment provision - Torgoviy Port Ltd. (-) (*) (5.903.919) (5.903.919)
103.728.231 122.016.733
(*) The Company's board of directors has decided to terminate its partnership on Torgoviy Port Ltd.
on May 11, 2011. The termination process of the partnership is still in progress as of December
31, 2018. Various lawsuits and counterclaims were brought to the judiciary in May and June
2012. As of 31 December 2018 and 2017, impairment provision has been booked for subsidiary
amount in Torgoviy Port Ltd.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
44
3. INTERESTS IN OTHER ENTITIES (cont’d)
b) Associates (cont’d)
Summarized Ünye Çimento Sanayi ve Ticaret A.Ş. (“Ünye Çimento”) selected financial information
are disclosed below. These financial information prepared in accordance with TAS represents the
Group share in the investment in associate accounted for equity method of accounts.
Ünye Çimento
31 December
2018
31 December
2017
Total Assets 375.428.718 384.034.452
Current Assets 185.860.392 209.384.883
Non-Current Assets 189.568.326 174.649.569
Total Liabilities 375.428.718 384.034.452
Short-Term Liabilities 92.465.607 55.747.678
Long-Term Liabilities 23.836.877 23.473.552
Equity 259.126.234 304.813.222
Share of the Group 40,03% 40,03%
Carrying Value of Subsidiary 103.728.231 122.016.733
Ünye Çimento
31 December
2018
31 December
2017
Revenue 300.258.414 252.526.159
Net profit for the year 24.279.879 77.702.146
Other comprehensive income 1.426.493 933.685
Earnings per share 9.719.236 31.104.169
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
45
4. SEGMENT REPORTING
The Group has implemented TFRS 8 as of January 1, 2009 and determined operating segments based
on internal management of reports used by governing body by the competent authority to make
decisions about the Group's operations.
The Group’s major reportable segments to from sales of cement in the domestic market.
The segment information for the year ended 31 December 2018 and 2017 are as follows:
31 December 2018
Construction and
Construction goods Energy
Consolidation
Adjustments Total
Third party sales 1.157.377.035 12.091.041 - 1.169.468.076
Related party sales 147.203.568 - (147.203.568) -
Net Sales 1.304.580.603 12.091.041 (147.203.568) 1.169.468.076
Cost of goods sold (984.883.371) (3.155.494) 147.203.568 (840.835.297)
Gross Profit 319.697.232 8.935.547 - 328.632.779
Total assets 1.715.121.811 226.962.078 - 1.942.083.889
Total liabilities 740.339.283 59.804.854 - 800.144.137
31 December 2017
Construction and
Construction goods Energy
Consolidation
Adjustments Total
Third party sales 988.003.064 14.469.014 - 1.002.472.078
Related party sales 145.654.034 - (145.654.034) -
Net Sales 1.133.657.098 14.469.014 (145.654.034) 1.002.472.078
Cost of goods sold (892.776.976) (14.184.820) 145.654.034 (761.307.762)
Gross Profit 240.880.122 284.194 - 241.164.316
Total assets 1.524.930.258 226.962.078 - 1.751.892.336
Total liabilities 566.052.185 59.804.854 - 625.857.039
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
46
5. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation and are not disclosed in this note.
The receivables and payables from related parties arise mainly from sale transactions of cement and
construction supplies.
Current
Trade
Receivables
Trade
Payables
Other
Receivables Sales
Kovcheg Ltd (1) 8.061.614 - - -
Trade Port 2.604.848 - - -
Çimpaş Çimento İnşaat Mlz. Paz. A.Ş. (2) 6.191 - - 39.218
Nuh Çimento Eğitim ve Sağlık Vakfı (3) (*) 50.268 - 172.166 199.769
Doubtful trade receivable provision (-)
Kovcheg Ltd (1) (8.061.614) - - -
Trade Port (2.604.848) - - -
56.459 - 172.166 238.987
Current
31 December 2018
(*) Amounts are consists of concrete sales that the Group has made to Nuh Çimento Eğitim ve
Sağlık Vakfı.
Current
Trade
Receivables
Trade
Payables Sales Purchases
Kovcheg Ltd (1) 8.061.614 - - -
Trade Port 2.604.848 - - -
Çimpaş Çimento İnşaat Mlz. Paz. A.Ş. (2) 106.799 154 194.749 -
Nuh Çimento Eğitim ve Sağlık Vakfı (3) 42.552 - 1.871.732 -
Doubtful trade receivable provision (-)
Kovcheg Ltd (1) (8.061.614) - - -
Trade Port (2.604.848) - - -
149.351 154 2.066.481 -
Current
31 December 2017
(1) Joint ventures
(2) Financial investments of the Company
(3) Foundation which was established by the Company with the decision of Council of Ministers.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
47
5. RELATED PARTY TRANSACTIONS (cont’d)
Compensation of key management personnel:
Key management personnel consists of members of Board of Directors and Executive Board members.
The compensation of key management personnel includes salaries, bonus, health insurance,
communication and transportation and total amount of compensation is disclosed below. The
remuneration of key management personnel during the year were as follows:
1 January- 1 January-
31 December 2018 31 December 2017
Salaries and other short-term benefits 8.797.790 8.574.147
6. TRADE RECEIVABLES AND PAYABLES
a) Trade Receivables:
As at reporting date, details of the Group’s trade receivables are as follows:
31 December
2018
31 December
2017
Trade receivables 202.655.776 200.856.388
Notes receivable 244.539.881 264.814.369
Trade receivables from related parties (Note: 5) 10.722.921 10.815.813
Income accruals 856.734 350.763
Discount of notes receivables (-) (8.465.066) (6.890.271)
Provision for doubtful receivables (-) (102.381.203) (86.325.700)
Trade receivables from related parties (10.666.462) (10.666.462)
Trade receivables from third parties (86.476.939) (75.659.238)
Expected credit losses (-) (*) (5.237.802) -
347.929.043 383.621.362
(*) TFRS 9 impacts are explained in Note 2.4.
Trade receivables are amounts due from customers for goods sold or services performed in the
ordinary course of business. They are generally due for settlement within 114 days and therefore are
all classified as current. The group holds the trade receivables with the objective to collect the
contractual cash flows and therefore measures them subsequently at amortised cost using the effective
interest method (31 December 2017: 164 days ).
As of 31 December 2018, trade receivables of TL 102.381.203 (31 December 2017: TL 86.325.700)
were impaired and provided for. Significant part of the individually impaired receivables consist of
wholesalers, which are in unexpectedly difficult economic situations and litigation process against the
Group and provisions by applying TFRS 9 within the scope of the Group’s general policy which
include varying dates depending on the delays.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
48
6. TRADE RECEIVABLES AND PAYABLES (cont’d)
a) Trade Receivables (cont’d):
Movements on the group provision for allowance of trade receivables are as follows:
Movement of doubtful receivables
1 January -
31 December 2018
1 January -
31 December 2017
1 January 2018 (Before transition of TFRS 9) 86.325.700 -
Transition effect of TFRS 9 (Note: 2.4) 1.129.718 -
1 January 2018 (After transition of TFRS 9) 87.455.418 85.236.720
Opening balance (1.301.203) (3.159.400)
Payments and reversal of unnecessary reserve (Note: 20) 12.118.904 4.248.380
Charge for the period (Note: 20) 4.108.084 -
Closing balance 102.381.203 86.325.700
Collaterals held for the doubtful trade receivables are TL 300.000 (31 December 2017: TL 300.000) as
of 31 December 2018.
The aging of trade receivables are as follows:
31 December
2018
31 December
2017
Neither not past due, nor imparied 302.634.005 352.032.870
Past due / overdue but not impaired 45.295.038 31.588.492
Impaired and provided for 102.381.203 86.325.700
450.310.246 469.947.062
As of 31 December 2018, trade receivables amounting to TL 45.295.038 (31 December 2017: TL
31.588.492) are overdue but are not considered as doubtful receivables due to the ability to collect.
Within the scope of the Company's general policy under the scope of TFRS 9 application, a provision
is made for varying rates based on delays. The maturity analysis of these receivables is as follows:
31 December
2018
31 December
2017
1 - 3 months 26.478.670 21.007.982
3 - 6 months 12.279.738 7.833.944
6 - 9 months 4.915.089 1.417.927
Over 9 months 1.621.541 1.328.639
45.295.038 31.588.492
The Group held guarantee letter amounting to TL 23.140.315 for the trade receivables that are past due
and not impaired (31 December 2017: TL 31.588.492).
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
49
6. TRADE RECEIVABLES AND PAYABLES (cont’d)
a) Trade Receivables (cont’d):
The Group always measures the loss allowance for trade receivables at an amount equal to lifetime
ECL. The expected credit losses on trade receivables are estimated using a provision matrix by
reference to past default experience of the debtor and an analysis of the debtor’s current financial
position, adjusted for factors that are specific to the debtors, general economic conditions of the
industry in which the debtors operate and an assessment of both the current as well as the forecast
direction of conditions at the reporting date.
There has been no change in the estimation techniques or significant assumptions made during the
current reporting period.
The following table details the risk profile of trade receivables based on the Group’s provision matrix.
As the Group’s historical credit loss experience does not show significantly different loss patterns for
different customer segments, the provision for loss allowance based on past due status is not further
distinguished between the Group’s different customer base.
31 December 2018 Not past due <30 31-90 >90 Total
Expected credit loss rate 0,38% 7,67% 14,43% 36,11% 58,60%
Estimated total gross carrying amount
at default267.956.114 8.416.526 10.208.238 5.797.807 292.378.685
Lifetime ECL 1.025.116 645.554 1.473.271 2.093.861 5.237.802
Trade receivables - days past due
1 January 2018 Not past due <30 31-90 >90 Total
Expected credit loss rate 0,10% 2,81% 6,66% 14,78% 24,35%
Estimated total gross carrying amount
at default292.388.998 8.224.114 5.143.239 3.866.485 309.622.836
Lifetime ECL 303.089 231.412 342.464 571.391 1.448.356
Trade receivables - days past due
b) Trade Payables:
The Group’s trade payables are as follows as at the balance sheet date:
31 December
2018
31 December
2017
Trade payables 105.453.626 99.272.863
Trade payables to related parties (Note: 5) - 154
Notes payable 14.088.896 13.491.219
119.542.522 112.764.236
The average maturity of credit sales of goods is 50 days. (31 December 2017: 55 days).
Explanation about the nature and level of risks related to trade receivables and payables are disclosed
in Note 28.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
50
7. OTHER RECEIVABLES AND PAYABLES
a) Other Receivables
Short-term other receivables
31 December
2018
31 December
2017
Other receivables from Related Parties (Note: 5) 172.166 -
Other receivables 2.617.379 2.049.148
Due from personnel 814.490 709.279
Deposits and quarantees given 3.962.478 4.594.920
Provision for doubtful receivables (-) (1.310.637) (1.310.637)
6.255.876 6.042.710
Long-term other receivables
31 December
2018
31 December
2017
Deposits and quarantees given 1.498.627 1.208.092
1.498.627 1.208.092
b) Other Payables
31 December
2018
31 December
2017
Taxes and dues payable 3.930.943 3.679.706
Deposits and quarantees taken 4.238.344 3.392.761
Other payable 530.348 323.021
8.699.635 7.395.488
8. OTHER CURRENT AND NON-CURRENT ASSETS
Other current assets
31 December
2018
31 December
2017
VAT carried forward 11.354.652 6.635.353
Deductible VAT 2.511.265 -
Personnel advances given 258.155 494.414
14.124.072 7.129.767
Other non-current assets
31 December
2018
31 December
2017
Deductible VAT in future years 4.237.369 -
4.237.369 -
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
51
9. INVENTORIES
31 December
2018
31 December
2017
Raw materials 145.094.122 119.145.278
Work in process 67.044.945 12.787.123
Finished goods 8.547.446 2.899.671
Trade goods 872.800 41.564
Other inventory - 2.977.276
Allowance for impairment on inventory (-) (2.039.998) (2.039.998)
219.519.315 135.810.914
The Group determines inventories whose net realizable value is below the cost of each year, and a
provision amounting to TL 2.039.998 has been reserved for inventory impairment (31 December
2017: TL 2.039.998). As of December 31, 2018, the total amount of inventories shown at net
realizable value is TL 2.039.998 (31 December 2017: TL 2.039.998).
10. PREPAID EXPENSES AND DEFERRED INCOME
Short term prepaid expenses
31 December
2018
31 December
2017
Advances given for inventory purchase 11.737.244 8.382.048
Prepaid expenses 5.861.560 4.278.956
17.598.804 12.661.004
Long term prepaid expenses
31 December
2018
31 December
2017
Advances given for fixed asset purchase 9.225.424 7.423.973
Prepaid expenses 280.190 327.628
9.505.614 7.751.601
31 December
2018
31 December
2017
Advances given for inventory purchasement 13.948.785 43.038.976
13.948.785 43.038.976
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
52
11. INVESTMENT PROPERTY
Cost Value Land Buildings
Advances
given Total
Opening balance as of 1 January 2018 26.579.838 186.434.009 9.938.073 222.951.920
Additions - 1.420.000 - 1.420.000
Çıkışlar - (857.097) - (857.097)
Impairment (-) - (251.852) - (251.852)
Closing balance as of 31 December 2018 26.579.838 186.745.060 9.938.073 223.262.971
Accumulated Depreciation Land Buildings
Advances
given Total
Opening balance as of 1 January 2018 - (12.257.106) - (12.257.106)
Charge of the year - (2.918.412) - (2.918.412)
Closing balance as of 31 December 2018 - (15.175.518) - (15.175.518)
Carrying value as of 31 December 2018 26.579.838 171.569.542 9.938.073 208.087.453
Cost Value Land Buildings
Advances
given Total
Opening balance as of 1 January 2017 26.579.838 181.095.583 9.938.073 217.613.494
Additions - 5.338.426 - 5.338.426
Closing balance as of 31 December 2017 26.579.838 186.434.009 9.938.073 222.951.920
Accumulated Amortization Land Buildings
Advances
given Total
Opening balance as of 1 January 2017 - (9.339.978) - (9.339.978)
Charge of the year - (2.917.128) - (2.917.128)
Closing balance as of 31 December 2017 - (12.257.106) - (12.257.106)
Carrying value as of 31 December 2017 26.579.838 174.176.903 9.938.073 210.694.814
All depreciation expenses are included in expenses from investment activities (31 December 2017:
included in expenses from investment activities).
Investment property consist of shopping mall and the hotel block and the lands which are held for
investment purposes by the Group. The Group evaluates any indicator of reduction in value of its
investment properties. If there is such an indicator exist, the Group compares the fair value and carring
value of the asset and records the impairment in value.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
53
11. INVESTMENT PROPERTY (cont’d)
The Group do not calculate fair value of land which is classified as investment properties every year
due to cost-utilization balance as of 31 December 2017. The Group management has calculated the
fair value of the land which is classified as investment properties in accordance with the decision taken
as of 31 December 2018. As of 31 December 2018, the fair value of the Group’s land which is
classified as investment property has been determined by an independent valuers not related to the
Group which is Bilgi Gayrimenkul Değerleme ve Danışmanlık A.Ş.. Independent valuer, In order to
provide real estate valuation services within the framework of the Communiqué Serial VIII, No: 35 of
the T.C. Prime Ministry Capital Market Board (CMB) on "Companies to Provide Real Estate
Valuation Service within the framework of Capital Markets Legislation and Communiqué on
Principles Regarding These Companies to be Listed on the Board" within the framework of the Capital
Markets Legislation, and in accordance with the decision taken at the meeting numbered 21/892, the
CMB has been authorized to provide Real Estate Valuation Service within the framework of
legislation and also independent valuer has experience to determine the fair value based on the market
comparable approach that reflects recent transaction prices for similar properties.
As of 31 December 2018, The Group’s rent revenue obtained by investment of real estate properties
amounting to TL 22.634.313 (31 December 2017: TL 19.853.093). The Group paid property tax for
investment of real estate properties amounting to TL 1.524.189 (31 December 2017: TL 1.267.066)
(Note: 23).
As of 31 December 2018 and 2017, the fair value of the Group’s investment property has been
determined by an independent valuers not related to the Group which is ACE Gayrimenkul Değerleme
ve Danışmanlık A.Ş.. Independent valuer, In order to provide real estate valuation services within the
framework of the Communiqué Serial VIII, No: 35 of the T.C. Prime Ministry Capital Market Board
(CMB) on "Companies to Provide Real Estate Valuation Service within the framework of Capital
Markets Legislation and Communiqué on Principles Regarding These Companies to be Listed on the
Board" within the framework of the Capital Markets Legislation, and in accordance with the decision
taken at the meeting numbered 21/892, the CMB has been authorized to provide Real Estate Valuation
Service within the framework of legislation and also independent valuer has experience to determine
the fair value based on the market comparable approach that reflects recent transaction prices for
similar properties. The fair value of the owned bazaar and hotel blocks was determined using a
discounted cash flow method. During revaluation process, independent valuer used the capitalization
rate was 8% and the nominal discount rate was 19% (31 December 2017: capitalization rate 9%,
discount rate 11% ).
Details of the Group’s investment properties and information about the fair value hierarchy as at 31
December 2018 and 2017 are as follows:
31 December 1. Level 2. Level 3. Level
2018 TL TL TL
Hotel and Shopping Mall 341.910.000 - - 341.910.000
Buildings 51.204.624 - 51.204.624 -
Lands 201.711.000 - 201.711.000 -
31 December 1. Level 2. Level 3. Level
2017 TL TL TL
Hotel and Shopping Mall 335.600.000 - - 335.600.000
Buildings 54.005.000 - 54.005.000 -
Fair value as at reporting period
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
54
12. PROPERTY, PLANT AND EQUIPMENT
Land
Land
Improvements Buildings
Plant, Machinery
and Equipment
Motor
Vehicles
Furniture and
Fixture
Other Tangible
Fixed Assets
Leasehold
Improvements
Construction in
Progress Total
Cost Value
Opening balance as of
1 January 2018 52.810.098 89.216.441 153.319.698 904.165.402 98.426.940 48.642.735 498.334 9.709.043 85.033.443 1.441.822.134
Additions 7.751.401 3.436.471 6.508.037 16.069.509 1.023.324 2.742.154 - 673.643 72.667.548 110.872.087
Disposals (396.544) (36.644) (403.790) (11.820.782) (12.082.681) (566.973) - (1.861.356) - (27.168.770)
Transfers from inventory - - - 42.065.469 - - - - - 42.065.469
Transfers - 24.199.638 20.738.444 91.027.744 13.807.734 138.331 - 621.039 (150.532.930) -
Closing balance as of
31 December 2018 60.164.955 116.815.906 180.162.389 1.041.507.342 101.175.317 50.956.247 498.334 9.142.369 7.168.061 1.567.590.920
Accumulated Depreciation
Opening balance as of
1 January 2018 - (52.244.136) (82.876.468) (570.315.204) (58.834.054) (40.036.288) (498.334) (4.903.508) - (809.707.992)
Charge of the year - (5.024.756) (6.831.663) (43.203.736) (10.764.270) (3.410.947) - (889.883) - (70.125.255)
Disposals - 30.752 321.983 11.391.624 8.595.738 552.813 - 579.947 - 21.472.857
Closing balance as of
31 December 2018 - (57.238.140) (89.386.148) (602.127.316) (61.002.586) (42.894.422) (498.334) (5.213.444) - (858.360.390)
Carrying value as of
31 December 2018 60.164.955 59.577.766 90.776.241 439.380.026 40.172.731 8.061.825 - 3.928.925 7.168.061 709.230.530
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
55
12. PROPERTY, PLANT AND EQUIPMENT (cont’d)
Land
Land
Improvements Buildings
Plant, Machinery
and Equipment
Motor
Vehicles
Furniture and
Fixture
Other Tangible
Fixed Assets
Leasehold
Improvements
Construction in
Progress Total
Cost Value
Opening balance as of
1 January 2017 50.705.468 80.702.169 152.904.453 842.956.036 109.457.215 47.080.061 498.334 11.176.245 17.017.661 1.312.497.642
Additions 2.104.630 3.523.413 - 15.593.341 1.367.849 1.643.594 - - 132.429.185 156.662.012
Disposals - (595.487) (47.355) (9.289.367) (26.988.969) (113.612) - (3.400.204) - (40.434.994)
Transfers from inventory - - - 14.434.227 - - - - - 14.434.227
Transfers - 5.586.346 462.600 40.471.165 14.590.845 32.692 - 1.933.002 (64.413.403) (1.336.753)
Closing balance as of
31 December 2017 52.810.098 89.216.441 153.319.698 904.165.402 98.426.940 48.642.735 498.334 9.709.043 85.033.443 1.441.822.134
Accumulated Depreciation
Opening balance as of
1 January 2017 - (48.406.706) (76.140.897) (537.482.328) (77.968.807) (36.804.997) (497.773) (6.208.793) - (783.510.301)
Charge of the year - (4.229.573) (6.774.709) (40.849.942) (6.024.289) (3.325.647) (561) (1.173.597) - (62.378.318)
Disposals - 392.143 39.138 8.017.066 25.159.042 94.356 - 2.478.882 - 36.180.627
Closing balance as of
31 December 2017 - (52.244.136) (82.876.468) (570.315.204) (58.834.054) (40.036.288) (498.334) (4.903.508) - (809.707.992)
Carrying value as of
31 December 2017 52.810.098 36.972.305 70.443.230 333.850.198 39.592.886 8.606.447 - 4.805.535 85.033.443 632.114.142
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
56
12. PROPERTY, PLANT AND EQUIPMENT (cont’d)
The useful lives for property, plant and equipment is as follows:
Useful lifes
Land Improvements 15-50 years
Buildings 25-50 years
Plant, Machinery and Equipment 5-25 years
Motor Vehicles 4-15 years
Furniture and Fixture 3-25 years
Other Tangible Fixed Assets 3-10 years
Leasehold Improvements 5-10 years
Depreciation expense of TL 56.031.539 (31 December 2017: TL 49.841.575) has been charged in cost
of goods sold, TL 5.593.235 (31 December 2017: TL 4.975.335) in marketing and sales expenses, and
TL 8.500.481 (31 December 2017: TL 7.561.408) in administrative expenses.
As of 31 December 2018, insurance coverage of the Group’s assets is TL 4.824.843.370 (31 December
2017: TL 3.934.253.389).
13. INTANGIBLE ASSETS
Cost Value Rights
Other
Intangible Assets Total
Opening balance as of 1 January 2018 41.464.589 212.155 41.676.744
Additions 476.838 - 476.838
Disposals (648) - (648)
Closing balance as of 31 December 2018 41.940.779 212.155 42.152.934
Accumulated Amortization
Opening balance as of 1 January 2018 (12.079.144) (183.946) (12.263.090)
Charge of the year (2.079.065) 4.365 (2.074.700)
Disposals 648 - 648
Closing balance as of 31 December 2018 (14.157.561) (179.581) (14.337.142)
Carrying value as of 31 December 2018 27.783.218 32.574 27.815.792
Cost Value Rights
Other
Intangible Assets Total
Opening balance as of 1 January 2017 38.971.169 205.219 39.176.388
Additions 1.156.667 6.936 1.163.603
Disposals 1.336.753 - 1.336.753
Closing balance as of 31 December 2017 41.464.589 212.155 41.676.744
Accumulated Amortization
Opening balance as of 1 January 2017 (9.575.325) (176.355) (9.751.680)
Charge of the year (2.503.819) (7.591) (2.511.410)
Closing balance as of 31 December 2017 (12.079.144) (183.946) (12.263.090)
Carrying value as of 31 December 2017 29.385.445 28.209 29.413.654
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
57
13. INTANGIBLE ASSETS (cont’d)
Amortization expense of TL 1.657.729 (31 December 2017: TL 2.006.669) has been charged in cost of
goods sold, TL 165.479 (31 December 2017: TL 200.312) in marketing and sales expenses, and TL
251.492 (31 December 2017: TL 304.429) in administrative expenses.
The useful lives for intangible assets are as follows:
Rights 4-20 years
Other Intangible Assets 1-10 years
Useful lifes
14. GOODWILL
Cost
31 December
2018
31 December
2017
Opening balance 24.910.842 24.910.842
Balance end of year 24.910.842 24.910.842
Accumulated impairment
Opening balance (7.562.568) (5.843.775)
Period charge for impairment provision (Note: 23) - (1.718.793)
Balance end of year (7.562.568) (7.562.568)
Carrying amount
Opening balance 17.348.274 19.067.067
Ending balance 17.348.274 17.348.274
Goodwill (Kudret Enerji) is valued by independent experts using discounted cash flow method.
According to the valuation, impairment which amounting to TL 5.843.775 is determined and
accounted under other expenses from operating activities as of December 31, 2013. In accordance with
the valuations performed by the independent valuation specialists using the discounted cash flows
method as of 31 December 2017, impairment amounting to TL 1.718.793 has booked to
accompanying consolidated financial statements. As of 31 December 2018, the independent valuation
experts have not determine the impairment loss according to the valuation method using the
discounted cash flow method.
In accordance with the valuations performed by the independent valuation specialists using the
discounted cash flows method as of 31 December 2018, the Group was identified 17,2 – 20,2 million
USD (31 December 2017: 13,8 – 17,5 million USD) net equity value. The USD-based weighted
average cost of capital was calculated as 11,38% for 2019 and after (31 December 2017: 9,97%) and
the unit electricity sale prices were held fixed for a 10-year purchase guarantee period and were
presumed to increase at the rate of annual average consumer inflation as of the subsequent periods.
The estimated electricity production throughout the period was assumed to be 38.000 kWh (31
December 2017: 37.972 kWh).
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
58
15. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES
a) Provisions
31 December 31 December
Short term other provisions 2018 2017
Legal claims and termination provisions 12.756.294 10.865.255
12.756.294 10.865.255
As of 31 December 2018, TL 19.167.252 for open lawsuits and proceeded against the Company and
its subsidiaries (31 December 2017: TL 13.478.438).
As of 31 December 2018, Total litigation provision amounted to TL 12.756.294 is recognized for the
these legal claims by taking the professional judgments of the Group’s lawyers in the accompanying
consolidated financial statements (31 December 2017: TL 10.865.255). Since, the Group management
don’t expect any cash outflow regarding rest of the cases, the Group management did not booked any
additional provision in accompanying consolidated financial statements for rest of cases.
As of 31 December 2018 and 2017, movements on the group provision for legal claims and
termination provisions are as follows:
1 January- 1 January-
31 December 2018 31 December 2017
Opening balance 10.865.255 11.384.613
Payments and reversal (2.159.553) (2.646.815)
Charge for the period (Note: 20) 4.050.592 2.127.457
Closing balance 12.756.294 10.865.255
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
59
15. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (cont’d)
a) Provisions (cont’d)
31 December 31 December
Long term other provisions 2018 2017
Land restoration provision 4.975.238 4.137.880
4.975.238 4.137.880
The Company owns mines in which the ownership belongs to the Company and holds the Company
owns mines and land usage rights of mines owned by Treasury of Turkey as of 31 December 2018. To
comply with the Communiqué of Ministry of Environment named as “Mining Operations and
Recovery of Damaged Land” which became effective after being published in the Official Gazette on
14 December 2007 and was amended on 23 January 2012, the Company has booked a provision
amounting to TL 4.975.238 (31 December 2017: TL 4.137.880) for restoration costs, to restore green
lands. In accordance with the Communiqué, the land shall be restored in two years’ period after the
termination of the mining operations. After the completion of such activities, the license holder is
permitted to leave the land in the following five years period.
As of 31 December 2018 and 2017, movements on the group provision for land restoration is as
follows:
1 January- 1 January-
31 December 2018 31 December 2017
Opening balance 4.137.880 5.895.941
Changes in current year charge 837.358 (1.758.061)
Closing balance 4.975.238 4.137.880
The change in the provision for land restoration provision is accounted under cost of goods sold.
b) Contingent assets and liabilities:
Nuh Enerji has given gas purchase commitment to its gas supplier and could not meet this
commitment during 2013. Although per agreement the Company may purchase the remaining part in
following years, the supplier issued an invoice amounting to TL 3.750.877 for related remaining gas
amount as of January 24, 2014. The Company has protested this invoice and was sued by the supplier.
As of 31 December 2018, the opinion of the Company and lawyers has changed and stated that the
possibility of the conclusion of the dispute against the Company is higher than the other. As at the
opening date of the related lawsuit, TL 971.518 of provision is recognized in the consolidated financial
statements. In addition, the collateral amounting to TL 3.745.114 has been expensed in the
consolidated financial statements as of 31 December 2018 (Note 20).
As of 31 December 2018, total amount of checks and notes endorsed to third parties is TL 9.935.074
(31 December 2017: TL 9.507.845).
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
60
15. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (cont’d)
b) Contingent assets and liabilities (cont’d)
The Group’s guarantees/pledge/mortgage position as at 31 December 2018 and 2017 are as follows:
31 December 2018 TL Equivalent TL US Dollars Euro
A. Total amount of the GPM's
given for its own legal entity
-Guarantee 25.487.755 25.487.755 - -
-Pledge - - - -
-Collaterals - - - -
B. GPM's given on behalf of fully
consolidated companies
-Guarantee 142.995.404 6.508.255 20.446.483 4.797.652
-Pledge - - - -
-Collaterals - - - -
C. GPM's are given on behalf of the third parties' debt
for continuation of their economic activities
-Guarantee - - - -
-Pledge - - - -
-Collaterals - - - -
D. Total amount of other GPM's
i. Given on behalf of majority shareholder
-Guarantee - - - -
-Pledge - - - -
-Collaterals - - - -
ii. Given on behalf of other group companies which
are not in the scope of B and C
-Guarantee - - - -
-Pledge - - - -
-Collaterals - - - -
iii. Given on behalf of third parties
which are not in the scope of C
-Guarantee - - - -
-Pledge - - - -
-Collaterals - - - -
Total 168.483.159 31.996.010 20.446.483 4.797.652
As of 31 December 2018, the rate of total amount of other “CPM”s to total equity of the Company is
0%.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
61
15. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (cont’d)
b) Contingent assets and liabilities (cont’d)
31 December 2017 TL Equivalent TL US Dollars Euro
A. Total amount of the GPM's
given for its own legal entity
-Guarantee 38.682.044 38.682.044 - -
-Pledge - - - -
-Collaterals - - - -
B. GPM's given on behalf of fully
consolidated companies
-Guarantee 179.111.351 6.554.894 39.222.286 5.450.984
-Pledge - - - -
-Collaterals - - - -
C. GPM's are given on behalf of the third parties' debt
for continuation of their economic activities
-Guarantee - - - -
-Pledge - - - -
-Collaterals - - - -
D. Total amount of other GPM's
i. Given on behalf of majority shareholder
-Guarantee - - - -
-Pledge - - - -
-Collaterals - - - -
ii. Given on behalf of other group companies which
are not in the scope of B and C
-Guarantee - - - -
-Pledge - - - -
-Collaterals - - - -
iii. Given on behalf of third parties
which are not in the scope of C
-Guarantee - - - -
-Pledge - - - -
-Collaterals - - - -
Total 217.793.395 45.236.938 39.222.286 5.450.984
As of 31 December 2017, the rate of total amount of other “CPM”s to total equity of the Company is
0%.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
62
16. EMPLOYEE TERMINATION BENEFITS
Payables related to employee benefits
31 December
2018
31 December
2017
Social security premiums payable 3.016.595 4.325.806
Due to personnel 2.533.071 2.572.481
5.549.666 6.898.287
Short-term provision for employment termination benefits
31 December 31 December
2018 2017
Provision for seniority incentive bonus 840.348 691.765
Provision for unused vacation pay liability 3.832.022 2.868.824
4.672.370 3.560.589
As of 31 December 2018 and 2017, movements on the group provision for unused vacation is as
follows:
1 January- 1 January-
31 December 2018 31 December 2017
Opening balance 2.868.824 2.186.072
Changes in current year charge 963.198 682.752
Closing balance 3.832.022 2.868.824
Long-term provision for employment termination benefits
31 December 31 December
2018 2017
Provision for employee termination benefits 26.476.564 24.684.772
Provision for seniority incentive bonus 5.986.862 5.473.528
32.463.426 30.158.300
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
63
16. EMPLOYEE TERMINATION BENEFITS (cont’d)
Long-term provision for employment termination benefits (cont’d)
Seniority incentive bonus:
Some subsidiaries of the Group pays additional employee benefits to their employees above certain
seniority limits as seniority incentive premiums. These incentive provision is reserved for to promote
loyalty to the Company and its subsidiaries. The benefits are provided as follows; employees with 5
year work experience are paid for their 30 days wage, those with 10 year work experience are paid for
their 55 days of their gross wage, those with 20 year work experience are paid for their 70 days wage,
those with 25 or 30 year work experience are paid for their 75 days wage, for each level of payment
with their actual working wage in the month they complete the respective seniority level in the
mentioned range.
To calculate the provision for seniority incentive payments, the Group has considered the each
employees years of service as of the balance sheet date since their job entrance dates and booked a
provision for the discounted amount of the future payments as of the reporting date.
As of 31 December 2018 and 2017, movements on the group provision for seniority incentive bonus is
as follows:
1 January- 1 January-
31 December 2018 31 December 2017
Opening balance 6.165.293 4.722.192
Current year charge 1.435.981 1.861.995
Payments (774.064) (418.894)
Closing balance 6.827.210 6.165.293
Employee termination benefits:
Under Turkish Labor Law, the Group is required to pay termination benefits to each employee who
has completed certain years of service and whose employment is terminated without due cause, is
called up for military service, dies or achieves the retirement age (58 for women and 60 for men).
The amount payable consists of one month’s salary limited to a maximum of TL 5,434.42 for each
period of service at 31 December 2018 (31 December 2017: TL 4,732.48).
Retirement pay liability is not subject to any kind of funding legally. Provision for retirement pay
liability is calculated by estimating the present value of probable liability amount arising due to
retirement of employees. TAS 19 Employee Benefits stipulates the development of Group’s liabilities
by using actuarial valuation methods under defined benefit plans. In this direction, actuarial
assumptions used in calculation of total liabilities are described as follows:
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
64
16. EMPLOYEE TERMINATION BENEFITS (cont’d)
Long-term provision for employment termination benefits (cont’d)
Employee termination benefits (cont’d):
The principal assumption is that the maximum liability for each year of service will increase parallel
with inflation. Thus, the discount rate applied represents the expected real rate after adjusting for the
anticipated effects of future inflation. Consequently, in the accompanying financial statements as at 31
December 2018, the provision has been calculated by estimating the present value of the future
probable obligation of the Group arising from the retirement of the employees. The provisions at the
respective balance sheet dates have been calculated with the assumption of 5.72% real discount rate
(31 December 2017: 4.47%) calculated by using 10,04% annual inflation rate and 16.33% discount
rate. Estimated amount of retirement pay not paid due to voluntary leaves is also taken into
consideration as 7,80% for employees with 0-15 years of service, and 0% for those with 15 or more
years of service. Ceiling for retirement pay is revised semi-annually. Ceiling amount of TL 6,017.60
which is in effect since 1 January 2019 is used in the calculation of Group’s provision for retirement
pay liability (1 January 2018: TL 5,001.76).
Significant assumptions used in the calculation of employee termination benefit is likely to leave the
job depends on the discount rate and demand.
If the discount rate had been 1% higher (lower), provision for employee termination benefits
would increase / (decrease) by TL 1.131.262 / TL (1.301.974).
If the inflation rate had been 1% lower / (higher) while all other variables were held constant,
provision for employee termination benefits would (increase) / decrease by TL 137.149 / TL
(123.645).
1 January- 1 January-
31 December 2018 31 December 2017
Opening balance 24.684.772 21.906.074
Service cost 7.979.111 7.133.250
Interest cost 1.102.680 905.271
Termination benefits paid (4.506.250) (4.654.393)
Actuarial (gain) / loss (2.783.749) (605.430)
Closing balance 26.476.564 24.684.772
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
65
17. OTHER PAYABLES AND EXPENSE ACCRUALS
Other short term liabilities
31 December
2018
31 December
2017
Deferred income 3.696.599 2.694.317
Other liabilities 7.070 4.789
3.703.669 2.699.106
18. SHARE CAPITAL, RESERVES AND OTHER EQUITY ITEMS
a) Share Capital
As of 31 December 2018 and 2017, the share capital held of the Company is as follows:
31 December 31 December
Shareholders Share (%) 2018 Share (%) 2017
Nuh Ticaret Sanayi ve Ticaret A.Ş. 44,13 66.283.864 44,13 66.283.864
Partaş Tekstil İnşaat Sanayi ve Ticaret A.Ş. 16,41 24.643.128 15,99 24.017.101
Diğer (*) 39,46 59.286.608 39,88 59.912.635
150.213.600 150.213.600
Capital inflation diffrences (**) 39.338.145 39.338.145
189.551.745 189.551.745
(*) Represents total of shareholdings less than 5%.
(**) “Adjustment to share capital” represents the restatement effect of cash and cash equivalent
contributions to share capital measured in accordance with the CMB Financial Reporting
Standards. “Adjustment to share capital” has no use other than being transferred to paid-in share
capital.
The Company is subject to the capital system. The Company’s issued capital assigned to 150.213.600
shares with nominal value of 1 TL each.
The capital adjustment differences may be used in free capital increase or loss deduction. Furthermore,
the inflation adjustment differences arising from legal reserves bearing no annotation to disable profit
distribution may be used in profit distribution.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
66
18. SHARE CAPITAL, RESERVES AND OTHER EQUITY ITEMS (cont’d)
b) Restricted Reserves Appropriated from Profit
31 December 31 December
2018 2017
Legal reserves 244.126.488 254.516.788
Extraordinary reserves 157.934.419 134.506.332
402.060.907 389.023.120
The legal reserves consist of first and second legal reserves appropriated in accordance with the
Turkish Commercial Code. The first legal reserve is appropriated out of historical statutory profits at
the rate of 5% per annum, until the total reserve reaches 20% (not indexed to inflation) of the historical
paid-in share capital. The second legal reserves are appropriated after the first legal reserves and
dividends at the rate of 10% per annum of all cash dividend distributions. According to the Turkish
Commercial Code, if the general legal reserve does not exceed half of the share capital or the issued
capital, it can be used only to close the losses, to continue the business when business is not going well
or to take measures to mitigate the results.
Dividend distribution:
Listed companies distribute dividends according to the Communique numbered II-19.1 and published
on 1 February 2014 in the Official Gazette.
In accordance with the Turkish Commercial Code (TCC), unless the required reserves and the
dividend for shareholders as determined in the article of association or in the dividend distribution
policy of the company are set aside, no decision may be made to set aside other reserves, to transfer
profits to the subsequent year or to distribute dividends to the holders of usufruct right certificates, to
the members of the board of directors or to the employees; and no dividend can be distributed to these
persons unless the determined dividend for shareholders is paid in cash.
Since May 2018, the Group has paid to shareholders amounting to TL 135.062.282 (31 December
2017: TL 135.192.240) TL 0.90 per share (31 December 2017: TL 0.90).
Funds Subject to Profit Distribution:
As of the balance sheet date, the Group’s total profit after deduction of previous year's losses in the
statutory records are TL 150.123.986 (31 December 2017: TL 149.916.240) and other funds that may
be subject to profit distribution is TL 402.060.907 (31 December 2017: 403.169.750 TL).
Accumulated losses of companies including previous year’s earnings, related premiums, legal
reserves, share capital inflation adjustments are taken into account as deduction in calculation of
current year distributable net income. In order to distribute dividends to the holders of dividend shares,
privileged shareholders, to the members of the board of directors or to the employees, there has to be a
provision in the articles of association. If there is no specific rate in terms of dividend distribution in
the articles of association, dividends to be distributed to those cannot exceed one-fourth of dividends
distributed to shareholders with the exception of privileged situations.
c) Foreign currency translation differences
As of 31 December 2018 and 2017 foreign currency translation differences are related to the
Company’s share in the foreign currency translation differences of the associates accounted under
equity method.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
67
19. REVENUE
Construction and
Construction goods Energy
Construction and
Construction goods Energy
Domestic sales 920.858.602 12.091.041 899.721.725 14.469.014
Foreign sales 244.284.235 - 97.492.376 -
Other sales 5.609.234 - 2.794.307 -
Sale returns (-) (63.471) - (610.434) -
Sale discounts (-) (13.311.565) - (11.394.910) -
1.157.377.035 12.091.041 988.003.064 14.469.014
Total Revenue 1.169.468.076 1.002.472.078
1 January - 31 December 2018 1 January - 31 December 2017
1 January-
31 December 2018
1 January-
31 December 2017
Raw materials used (738.056.694) (658.800.054)
Employee benefits expenses (14.079.031) (18.525.200)
Production overheads (30.019.067) (28.428.350)
Amortization and depreciation expenses (Note: 12 and 13) (57.689.268) (54.179.090)
Other sales expenses (991.237) (1.375.068)
(840.835.297) (761.307.762)
20. ADMINISTRATIVE EXPENSES, MARKETING AND SALES EXPENSES AND RESEARCH
AND DEVELOPMENT EXPENSES
Administrative expenses (99.627.015) (84.671.435)
Marketing and sales expenses (25.263.374) (18.293.198)
Research and development expenses (5.841) (181.567)
(124.896.230) (103.146.200)
1 January-
31 December
2018
1 January-
31 December
2017
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
68
20. ADMINISTRATIVE EXPENSES, MARKETING AND SALES EXPENSES AND RESEARCH
AND DEVELOPMENT EXPENSES (cont’d)
a) Details of administrative expenses
Employee benefit expenses (35.597.406) (31.445.564)
Changes in doubtful provisions (Note: 6) (16.226.988) (4.248.380)
Outsourcing expenses (9.381.646) (19.389.617)
Tax and subscription fee (8.968.593) (8.986.806)
Depreciation and amortization expenses (Note: 12 ve 13) (8.751.973) (8.219.448)
Changes in litigation provision (Note: 15) (4.050.592) (2.127.457)
Premium expenses (4.043.173) (3.535.102)
Uncollectable receivables (Note: 15) (3.745.114) -
Rent expenses (1.941.357) (1.793.356)
Office administration expenses (1.590.611) (873.040)
Steam expenses (1.363.477) (997.969)
Insurance expenses (1.268.871) (812.997)
Maintenance and repairment expenses (1.235.145) (1.233.724)
Utility expenses (534.767) (335.820)
Electricity expenses (200.818) (150.793)
Other expenses (726.484) (521.362)
(99.627.015) (84.671.435)
1 January-
31 December
2018
1 January-
31 December
2017
b) Details of marketing and sales expenses
Exportation expenses (8.860.589) (5.794.837)
Depreciation and amortization expenses (Note: 12 ve 13) (5.758.714) (5.408.318)
Outsourcing expenses (3.648.345) (2.755.689)
Employee benefit expenses (3.078.170) (1.648.140)
Premium expenses (1.027.446) (922.920)
Tax and subscription fee (716.943) (668.332)
Maintenance and repairment expenses (259.059) (258.756)
Transportation expenses (310.449) (218.426)
Rent expenses (311.873) (122.583)
Insurance expenses (73.466) (66.726)
Other expenses (1.218.320) (428.471)
(25.263.374) (18.293.198)
1 January-
31 December
2018
1 January-
31 December
2017
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
69
21. EXPENSES BY NATURE
Depreciation and amortization expenses (Note: 11,12 ve 13) (75.118.367) (67.806.856)
Employee benefit expenses (38.681.417) (33.275.271)
Changes in doubtful provisions (Note: 6) (16.226.988) (4.248.380)
Outsourcing expenses (13.029.991) (22.145.306)
Tax and subscription fee (9.685.536) (9.655.138)
Exportation expenses (8.860.589) (5.794.837)
Changes in litigation provision (Note: 15) (4.050.592) (2.127.457)
Premium expenses (5.070.619) (4.458.022)
Uncollectable receivables (Note: 15) (3.745.114) -
Rent expenses (2.253.230) (1.915.939)
Office administration expenses (1.590.611) (873.040)
Maintenance and repairment expenses (1.494.204) (1.492.480)
Steam expenses (1.363.477) (997.969)
Insurance expenses (1.342.337) (879.723)
Utility expenses (534.767) (335.820)
Transportation expenses (310.449) (218.426)
Electricity expenses (200.818) (150.793)
Other expenses (1.944.804) (949.833)
(185.503.910) (157.325.290)
1 January-
31 December
2018
1 January-
31 December
2017
22. INCOME AND EXPENSES FROM OPERATING ACTIVITIES
The details of other income from operating activities for the years ended 31 December 2018 and 2017
are as follows:
1 January-
31 December
2018
1 January-
31 December
2017
FX gains from trade receivables and payables 46.999.411 13.894.194
Accident and damage income 4.376.239 33.162
Interest income 3.138.499 1.342.270
Insurance income 2.750.836 2.346.393
Scrap sales income 2.370.543 2.098.042
Service income from subcontractors 704.498 531.812
Other income 1.020.529 210.059
61.360.555 20.455.932
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
70
22. INCOME AND EXPENSES FROM OPERATING ACTIVITIES (cont’d)
The details of other expense from operating activities for the years ended 31 December 2018 and 2017
are as follows:
1 January-
31 December
2018
1 January-
31 December
2017
FX losses from trade receivables and payables (28.428.017) (14.729.218)
Donations and grants (11.188.425) (7.697.426)
Accident and damage expenses (3.335.731) (1.907.602)
Interest expenses (4.483.080) (1.981.008)
Other expenses (1.080.267) (433.123)
(48.515.520) (26.748.377)
23. INCOME AND EXPENSES FROM INVESTING ACTIVITIES
The details of other income from investing activities for the years ended 31 December 2018 and 2017
are as follows:
1 January-
31 December
2018
1 January-
31 December
2017
Rent income (*) 22.634.313 19.853.093
Gain on sale of fixed assets 4.996.202 7.135.361
27.630.515 26.988.454
(*) Includes the rent income from investment properties.
The details of other expense from investing activities for the years ended 31 December 2018 and 2017
are as follows:
1 January-
31 December
2018
1 January-
31 December
2017
Depreciation expenses from investment property (Note: 11) (2.918.412) (2.917.128)
Impairment expense from investment property (Note: 11) (251.852) -
Impairment provision for goodwill (Note: 14) - (1.718.793)
Real estate tax for investment property (1.524.189) (1.267.066)
Loss on sale of fixed assets (1.089.155) (810.792)
Loss on subsidiary (Note: 2.1) - (147.500)
(5.783.608) (6.861.279)
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
71
24. FINANCE INCOME AND EXPENSES
The details of income from finance activities for the years ended 31 December 2018 and 2017 are as
follows:
1 January-
31 December
2018
1 January-
31 December
2017
Foreign exchange gains 85.351.707 39.431.339
Interest income 17.799.837 8.942.521
103.151.544 48.373.860
The details of expense from finance activities for the years ended 31 December 2018 and 2017 are as
follows:
1 January-
31 December
2018
1 January-
31 December
2017
Foreign exchange losses (83.856.544) (41.152.601)
Interest expenses (69.203.484) (33.108.238)
Expense from derivative instruments (Note: 27) (1.105.535) -
(154.165.563) (74.260.839)
25. INCOME TAXES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES)
Corporation tax
Group,its subsidiary established in Turkey and other countries,associates and joint ventures are subject
to the tax legistation and practices in the countries which they are operating.
In Turkey, the corporate tax rate is 22% (2017: 20%). This rate is applicable to the tax base derived
upon exemptions and deductions stated in the tax legislation and by addition of disallowable expenses
to the commercial revenues of the companies with respect to the tax legislation. Corporate tax is
required to be filed by the twenty-fifth day of the fourth month following the balance sheet date and
taxes must be paid in one instalment by the end of the fourth month.
Companies calculate a temporary tax of 22% on their quarterly financial profits and declare until the
14th day of the second month following that period and pay it until the seventeenth day.The paid
temporary tax within the year is deducted from the corporate tax to be calculated over the corporate
tax declaration to be given the following year. If there is a temporary tax remaining despite the offset,
this amount may be refunded in cash or deducted from any other financial debt against the state.
Corporate tax losses can be carried forward for a maximum period of 5 years following the year in
which the losses were incurred. The tax authorities can inspect tax returns and the related accounting
records for a retrospective maximum period of five years.
15% withholding applies to dividends distributed by resident real persons, those who are not liable to
income and corporation tax, non-resident real persons, non-resident corporations (excluding those that
acquire dividend through a permanent establishment or permanent representative in Turkey) and non-
resident corporations exempted from income and corporation tax.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
72
25. INCOME TAXES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) (cont’d)
Corporation tax (cont’d)
Dividend distribution by resident corporations to resident corporations is not subject to a withholding
tax. Furthermore, in the event the profit is not distributed or included in capital, no withholding tax
shall be applicable.
Turkish tax legislation does not permit a parent company and its subsidiaries to file a consolidated tax
return. Therefore, tax liabilities, as reflected in these consolidated financial statements, have been
calculated on a separate-entity basis. As of 31 December 2018, current income tax payables have been
offset against the prepaid taxes in entity basis but such offset amounts have been classified in gross
basis in the consolidated financial statements. Prepaid taxes and corporate tax provision have been
demonstrated as follows:
Investment incentives
The revoked phrase “only attributable to “2006, 2007 and 2008” stated in Provisional Article 69 of
Income Tax Law No:193 with the effect of Article 5 of Law No:6009 after having published in the
Official Gazette No: 27659 as at 1 August 2010 and the Constitutional Court’s issued resolution no:
2009/144 published in the Official Gazette as at 8 January 2010 has been revised. The revised
regulation allows companies to continue to benefit from the exception of undeductible and carry
forward investment incentive due to insufficient earnings irrespective of having any time constraints.
However, deductible amount for investment incentive exception used in the determination of tax base
cannot exceed 25% of the related period’s income. In addition, companies that opt to use the
investment incentive exemption are allowed to apply 20% of income tax, instead of 30% under the
related revised regulation.
The additional paragraph to Provisional Article 69 included in accordance with Law No:6009, which
is related to the 25% threshold and requires the incentive amount that will be subject to investment
incentive exemption in determining tax base cannot exceed 25% of the respective income, has been
revoked based on the ground that it is contrary to the Constitution upon the Constitutional Court’s
resolution No: E. 2010/93 K. 2012/20 (“stay of execution”) issued on 9 February 2012 and published
in the Official Gazette No: 28208 on 18 February 2012. The related Constitutional Court’s decision
was published in the official Gazette No: 28719 as at 26 July 2013.
31 December 31 December
Current tax liability 2018 2017
Current corporate tax provision 22.770.156 27.353.635
Less: prepaid taxes and funds (22.142.167) (21.617.468)
627.989 5.736.167
As of 31 December 2018 and 2017, details of tax expense in consolidated profit table is as follows:
31 December 31 December
2018 2017
Corporate tax (-) (22.770.156) (27.353.635)
Deferred tax (expense) / income (24.239.566) 20.191.590
(47.009.722) (7.162.045)
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
73
25. INCOME TAXES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) (cont’d)
Tax recognized on other comphrensive income:
Before tax Tax expense/ Net of tax
amount income amount
Actuarial gain on post employments benefits (Note: 16) 2.783.749 ( 556.750) 2.226.999
Portion of other comprehensive income from
investments valued by equity method 433.811 1.219 435.030
Currency Translation Differences 439.904 - 439.904
Actuarial gain on post employments benefits ( 6.093) 1.219 ( 4.874)
Other comprehensive income 3.217.560 ( 555.531) 2.662.029
1 January - 31 December 2018
Before tax Tax expense/ Net of tax
amount income amount
Actuarial loss on post employments benefits (Note: 16) 605.430 ( 121.086) 484.344
Portion of other comprehensive income from
investments valued by equity method 417.515 ( 43.752) 373.763
Currency Translation Differences 198.756 - 198.756
Actuarial loss on post employments benefits 218.759 ( 43.752) 175.007
Other comprehensive income 1.022.945 ( 164.838) 858.107
1 January - 31 December 2017
Deferred tax:
The Group recognizes deferred tax assets and liabilities based upon temporary differences arising
between its financial statements as reported for TAS purposes and its statutory tax financial
statements. These differences usually result in the recognition of revenue and expenses in different
reporting periods for TAS and tax purposes and they are given below.
The corporate tax rate has been increased to 22% from 20% for 2018,2019 and 2020 according to The
Law numbered 7061 on Amendment of Certain Taxes and Laws and Other Acts which published on
the Official Gazette dated 5 December 2017. In accordance with the aforementioned law, the deferred
tax assets and liabilities in the consolidated financial statements as of 31 December 2018 and 2017
have been calculated with the tax rate of 22% for the temporary differences arising from the tax effect
in 2019 and 2020 and calculated with tax rate of 20% for the temporary differences arising from tax
effect in 2021 and subsequent periods.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
74
25. INCOME TAXES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) (cont’d)
Deferred tax (cont’d):
Turkish tax legislation does not permit a parent company and its subsidiary to file a consolidated tax
return. Therefore, provisions for taxes, as reflected in the accompanying consolidated financial
statements, have been calculated on a separate-entity basis.
Details of deferred tax assets, liabilities, income and expenses are stated below:
31 December 31 December
2018 2017
Temporary diffrences from tangible and intangible assets (29.259.254) (25.699.782)
Discount of receivables (20.223) 77.504
Temporary diffrences from discount of bank loans (496.447) (36.500)
Provision for employment termination benefits 5.295.313 4.936.954
Provision for seniority incentive bonus 1.382.249 1.246.894
Provision for unused vacation 843.045 631.141
Provision for land restoration provision 995.048 827.576
Provision for doubtful receivables (including TFRS 9 impact) 6.478.461 5.600.248
Provision for legal claims 2.806.385 2.390.356
Temporary diffrences from advances 101.999 203.769
Temporary diffrences from inventories 575.933 575.933
Impairment for subsidiaries (2.735) (2.735)
Impairment for goodwill 343.758 343.758
Temporary diffrences from derivative instruments 243.218 -
Uncollectable receivables 749.023 -
Expected credit losses from demand and time deposits - TFRS 9 342.069 -
Carryforward tax losses 5.965.913 26.087.066
Investment incentives - 1.992.480
Temporary diffrences from investment property 1.679.364 1.987.573
Other 81 86
(1.976.800) 21.162.321
Less: Provision for deferred tax assets (4.404.538) (2.747.343)
Deferred tax assets 10.557.907 27.371.181
Deferred tax liabilities (16.939.245) (8.956.203)
Deferred tax liabilities, net (6.381.338) 18.414.978
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
75
25. INCOME TAXES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) (cont’d)
Deferred tax (cont’d):
Details of subsidiary merger disclosed in Note 1 and 31. In previous years, the Group did not adjust
deferred tax assets from unused tax losses from Nuh Enerji. Related subsidiary merger has been
registered in 27 February 2018. In accordance to that, the Group has adjusted deferred tax assets from
unused tax losses into the current year consolidated financial statements As of 31 December 2017, the
Group has unused tax losses of TL 75.963.294 available for offset against future profits. A deferred
tax asset has been recognized in respect of TL 16.711.925 of such losses. As of 31 December 2018,
related accumulated losses have been offset against the profit of the Company.
Expiration schedule of carryforward tax losses which has calculated as deferred tax assets is as
follows:
31 December 31 December
2018 2017
Expiring in 2017 - 5.322.017
Expiring in 2018 - 75.963.294
Expiring in 2021 2.375.591 4.751.182
Expiring in 2022 2.757.908 5.515.816
Expiring in 2023 2.315.113 -
7.448.612 91.552.309
Movement of deferred tax (assets) / liabilities for years ended 31 December 2018 and 2017 are as
follows:
Movement of deferred tax liabilities:
1 January-
31 December
2018
1 January-
31 December
2017
Opening balance as at January, 1 18.414.978 (1.655.526)
Charged to profit or loss (24.239.566) 20.191.590
Charged to equity (556.750) (121.086)
Closing balance as at December, 31 (6.381.338) 18.414.978
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
76
25. INCOME TAXES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) (cont’d)
Deferred tax (cont’d):
Total charge for the year can be reconciled to the accounting profit as follows:
1 January- 1 January-
Income tax reconcilation: 31 December 2018 31 December 2017
Income before tax from operating activities 197.133.708 157.070.036
Effective tax rate 22% 20%
Expected taxation expenses (43.369.416) (31.414.007)
Tax effect of:
- Undeductible expenses (5.503.522) (4.116.962)
- Discount and donations 3.134.834 2.527.315
- Gain/loss effect of the Group's share investment
in associates accounted for the equity method 1.943.847 6.220.834
- Change in reserve for
carryforward tax losses (1.657.195) 15.192.659
- Unused investment incentives - 1.992.480
- Previously calculated deferred tax assets under
previous year losses not calculated in current year (1.113.191) -
-Effects of tax rate change under
deferred tax calculations (442.607) 2.276.086
- Effect of other adjustments (2.472) 159.550
Income tax benefit recognised in profit (47.009.722) (7.162.045)
26. EARNINGS PER SHARE
Earnings per share are calculated by dividing net profit by the weighted average number of shares that
have been outstanding during the year.
Companies can increase their share capital by making a pro rata distribution of shares (Bonus Shares)
to existing shareholders without consideration for amounts resolved to be transferred to share capital
from retaind earnings. For the purpose of the earnings per share calculation such Bonus Share issues
are regarded as stock dividends. Dividend payments, which are immediately reinvested in the shares of
the Company, are regarded similarly.
Earnings per share are determined by dividing net income of the shareholders by the weighted average
number of shares that have been outstanding during the related year.
1 January- 1 January-
31 December 2018 31 December 2017
Net income for the year 150.123.986 149.907.991
Weighted average number of ordinary shares 150.213.600 150.213.600
(TL 1 nominal value per share
earnings per share) 1,00 1,00
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
77
27. FINANCIAL INSTRUMENTS
Financial Investments
Long term financial investments:
31 December 31 December
Associates Share (%) 2018 Share (%) 2017
Cementos Esfera S.A. (*) 10 2.433.760 10 2.433.760
Çimpaş Çimento ve İnşaat Mlz. Paz. A.Ş. (*) 12,10 90.900 12,10 90.900
Kosbaş Kocaeli Serbest Bölgesi (*) <1 37.500 <1 37.500
Antalya Güç Birliği (*) <1 7.805 <1 7.805
2.569.965 2.569.965
(*) As of 31 December 2018 and 2017, Çimpaş Çimento ve İnşaat Mlz. Paz. A.Ş., Cementos
Esfera S.A., Antalya Güç Birliği and Kosbaş Kocaeli Serbest Bölgesi which are financial
assets held for sales, are carried at cost in the consolidated balance sheet since these
investments have no significant effect on the consolidated financial statements and a
reasonable calculation of their fair value is also not possible.
Financial Liabilities
31 December 31 December
2018 2017
Short-term bank borrowings 267.453.210 127.156.091
Current portion of long term borrowings 66.881.631 95.782.504
Total short term borrowings 334.334.841 222.938.595
Long term bank borrowings 240.824.922 166.707.957
Total borrowings 575.159.763 389.646.552
As of 31 December 2018 and 2017, details of the short and long term borrowings which are Group
used are stated below:
Currency Interest Rate (%) Current Non-Current
Euro 2,70 - 5,50 63.581.210 13.563.000
USD 2,05 - 3,21 23.224.948 21.928.589
TL 11,15 - 27,02 247.528.683 205.333.333
334.334.841 240.824.922
31 December 2018
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
78
27. FINANCIAL INSTRUMENTS (cont’d)
Financial Liabilities (cont’d)
Currency Interest Rate (%) Current Non-Current
Euro 2,70 - 5,50 22.899.889 48.541.625
USD 1,65 - 4,46 39.067.495 47.166.332
TL 6,25 - 16,00 160.971.211 71.000.000
222.938.595 166.707.957
31 December 2017
Maturity of borrowings are stated below:
31 December 31 December
2018 2017
To be paid within 1 year 334.334.841 222.938.595
To be paid between 1-2 years 240.824.922 135.348.104
To be paid between 2-3 years - 31.359.853
575.159.763 389.646.552
Reconcilation of liabilities from finance activities are stated below:
The table below details changes in the Group’s liabilities arising from financing activities, including
both cash and non–cash changes. Liabilities arising from financing activities are those for which cash
flows were, or future cash flows will be, classified in the Group’s consolidated statement of cash flows
as cash flows from financing activities.
1 January
2018
Financing
cash-flows
Interest
accrual
adjustment
Foreign
currency
movement
31 December
2018
Bank Borrowings 389.646.552 158.316.518 4.022.861 23.173.832 575.159.763
389.646.552 158.316.518 4.022.861 23.173.832 575.159.763
1 January
2017
Financing
cash-flows
Interest
accrual
adjustment
Foreign
currency
movement
31 December
207
Bank Borrowings 151.733.293 225.343.033 3.029.001 9.541.225 389.646.552
151.733.293 225.343.033 3.029.001 9.541.225 389.646.552
Non-cash changes
Non-cash changes
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
79
27. FINANCIAL INSTRUMENTS (cont’d)
Derivative Financial Instruments
Assets Liabilities Assets Liabilities
Foreign Currency Forward Contracts - (1.105.535) - -
Short-term - (1.105.535) - -
Long-term - - - -
- (1.105.535) - -
31 December 2018 31 December 2017
The Group uses foreign exchange derivatives to hedge its future significant transactions and cash
flows from financial risk. The Group is a party to various foreign currency forwards transactions and
options depending on the management of exchange rate fluctuations. The derivative instruments
purchased are mainly denominated in foreign currencies in which the Group operates.
As of December 31, 2018, the fair value of the Group's cross exchange contracts is estimated to be
approximately TL 30.453.300 and as of 31 December 2018, TL 1.105.535 loss is recognized in the
statement of profit or loss (31 December 2017: None).
The Group's main financial instruments consist of bank loans, cash and short-term deposits. The
main purpose of these financial instruments is to finance the Group's operations. The Group also has
other financial instruments, such as trade payables and trade receivables, arising directly from its
operations.
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS
a) Capital risk management
For proper management of capital risk, the Company aims to maintain continuity of operations so as to
provide earnings to partners and benefits to other shareholders, and to increase profitability through
determining a product and service pricing policy that is commensurate with the level of risks inherent
in the market.
The capital structure of the Group consists of debt, which includes the borrowings disclosed in Note
27, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued
capital, reserves and retained earnings.
The Group determines the amount of share capital in proportion to the risk level. The equity structure
of the Group is arranged in accordance with the economic outlook and the risk attributes of assets.
The Group monitors capital management by using the debt/equity ratio. This ratio is calculated by
dividing the debt, net, by the total share capital. The net debt is calculated by deducting the value of
cash and cash equivalents from the total debt. The total share capital is the sum of all equity items
stated in the statement of consolidated financial position.
During 2018, the Group’s strategy, which was unchanged from 2017, was to maintain the gearing ratio
which is calculated by financial liabilities minus cash and cash equivalents and short term financial
liabilities. The gearing ratios at 31 December 2018 and 2017 were as follows:
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
80
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d)
a) Capital risk management (cont’d)
31 December 31 December
2018 2017
Financial Liabilities (Note: 27) 575.159.763 389.646.552
Less: Cash and Cash Equivalents (Note: 32)
and Short Term Financial Investments (239.860.344) (155.753.668)
Net Debt 335.299.419 233.892.884
Total Equity 1.141.939.752 1.126.035.297
Total Capital 1.477.239.171 1.359.928.181
Gearing Ratio 22,73% 17,20%
b) Financial Risk Factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk,
fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.
The Group’s overall risk management programme focuses on the unpredictability of financial markets
and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses
derivative financial instruments to hedge certain risk exposures.
Risk management is carried out under policies approved by the board of directors. Group treasury
identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units.
The board provides written principles for overall risk management, as well as written policies covering
specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial
instruments and non-derivative financial instruments, and investment of excess liquidity.
b.1) Credit risk management
In order to minimise credit risk, the Group has adopted a policy of only dealing with creditworthy
counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk
of financial loss from defaults. The Group monitors the credibility of the parties with whom they
perform transactions and also takes into account the credit rating of the related instruments when
making the investment preference. The credit rating information is supplied by independent rating
agencies where available and, if not available, the Group uses other publicly available financial
information and its own trading records to rate its major customers. The Group's exposure and the
credit ratings of its counterparties are continuously monitored and the aggregate value of transactions
concluded is spread amongst approved counterparties.
Before accepting any new customer, credit limits by customer are determined and defined after the
assessment of the potential customer’s credit quality.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
81
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d)
b) Financial Risk Factors (cont’d)
b.1) Credit risk management (cont’d)
Credit approvals and other monitoring procedures are also in place to ensure that follow-up action is
taken to recover overdue debts. The Group's trade receivables cover a large number of customers
within the majority and the construction sector. Ongoing credit evaluation is performed on the
financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is
purchased. Additionally, the Group management evaluates the trade payables and financial assets on a
customer and asset basis at the end of the period and ensures that the required provisions for the non-
collectible amounts are reflected in the consolidated financial statements.
Overview of the Group’s exposure to credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Group. As at 31 December 2018, the Group’s maximum exposure to credit risk
without taking into account any collateral held or other credit enhancements, which will cause a
financial loss to the Group due to failure to discharge an obligation by the counterparties and financial
guarantees provided by the Group arises from:
the carrying amount of the respective recognised financial assets as stated in the consolidated
statement of financial position; and
the maximum amount the entity would have to pay if the financial guarantee is called upon,
irrespective of the likelihood of the guarantee being exercised.
In order to minimize the credit risk, the Group has performed credit ratings considering the default
risks of the counterparties and categorized the related parties. The Group's current credit risk rating
methodology includes the following categories:
Category Description Basis for recognizing
expected credit losses
Performing The counterparty has a low risk
of default and does not have any
past-due amounts
12-month ECL
Doubtful Amount is >30 days past due or
there has been a significant
increase in credit risk since
initial recognition
Lifetime ECL – not credit –
impaired
In default Amount is >90 days past due or
there is evidence indicating the
asset is credit-impaired
Lifetime ECL – credit –
impaired
Write-off There is evidence indicating that
the debtor is in severe financial
difficulty and the Group has no
realistic prospect of recovery
Amount is written off
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
82
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d)
b) Financial Risk Factors (cont’d)
b.1) Credit risk management (cont’d)
Credit risk exposure based
on financial instrument categories
31 December 2018 Related Party Third Party Related Party Third Party
Financial
Investments Bank Deposits
Minimum credit risk exposure at the balance sheet date (*) 56.459 347.872.584 172.166 7.582.337 2.931.240 220.280.644
- Secured portion of minimum credit risk via guarantee or etc. (**) - 78.125.665 - - - -
A. Net book value of not due or not impaired financial assets 56.459 302.577.546 172.166 7.582.337 2.931.240 220.280.644
B. Net book value of assets that are due but not impaired - 45.295.038 - - - -
- Overdue (gross book value) - 45.295.038 - - - -
- Secured net value via guarantee or etc. - 23.140.315 - - - -
C. Net book value of impaired assets - - - - - -
- Overdue (gross book value) 10.666.462 86.476.939 - 1.310.637 - -
- Impairment (-) (10.666.462) (86.476.939) - (1.310.637) - -
- Secured net value via guarantee or etc. - 300.000 - - - -
- Not due (gross book value) - - - - - -
- Impairment (-) - - - - - -
- Secured net value via guarantee or etc. - - - - - -
D. Off balance sheet items bearing credit risk - - - - - -
Receivables
Trade Receivables Other Receivables
(*) The factors that increase the credit reliability, such as guarantees received are not considered in the determination of the balance.
(**) Guarantees consist of guarantee letters, guarantee notes and mortgages obtained from the customers.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
83
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’)
b) Financial Risk Factors (cont’d)
b.1) Credit risk management (cont’d)
Credit risk exposure based
on financial instrument categories
31 December 2017 Related Party Third Party Related Party Third Party
Financial
Investments Bank Deposits
Minimum credit risk exposure at the balance sheet date (*) 149.351 383.472.011 - 7.250.802 2.028.322 133.364.160
- Secured portion of minimum credit risk via guarantee or etc. (**) - 127.843.838 - - - -
A. Net book value of not due or not impaired financial assets 149.351 351.883.519 - 7.250.802 2.028.322 133.364.160
B. Net book value of assets that are due but not impaired - 31.588.492 - - - -
- Overdue (gross book value) - 31.588.492 - - - -
- Secured net value via guarantee or etc. - 31.588.492 - - - -
C. Net book value of impaired assets - - - - - -
- Overdue (gross book value) 10.666.462 75.659.238 - 1.310.637 - -
- Impairment (-) (10.666.462) (75.659.238) - (1.310.637) - -
- Secured net value via guarantee or etc. - 300.000 - - - -
- Not due (gross book value) - - - - - -
- Impairment (-) - - - - - -
- Secured net value via guarantee or etc. - - - - - -
D. Off balance sheet items bearing credit risk - - - - - -
Receivables
Trade Receivables Other Receivables
(*) The factors that increase the credit reliability, such as guarantees received are not considered in the determination of the balance.
(**) Guarantees consist of guarantee letters, guarantee notes and mortgages obtained from the customers.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
84
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d) b) Financial Risk Factors (cont’d)
b.1) Credit risk management (cont’d)
Ownership of financial assets involves the risk that counterparties may be unable to meet the terms of
their agreements. The Group manages this risk that may arise from its dealers or from other customers
by restricting the credit limits determined for the dealers according the amount of guarantees received.
Credit limits are regularly monitored by the Group and the customers’ credit quality are regularly
evaluated by considering the customer’s financial position, past experiences and other factors.
Most of the Group’s trade receivables are coming from sales of construction supplies with customers.
If necessary, Group takes insurance or guarantees for these trade receivables from customers.
Aging analysis of the receivables which are overdue but not impaired is as follows:
31 December 2018 31 December 2017
Until 1-90 days 26.478.670 21.007.982
Until 3-6 months 12.279.738 7.833.944
Until 6-9 months 4.915.089 1.417.927
Until 9-12 months 983.797 379.653
More than 1 year past due 637.744 948.986
Total overdue receivables 45.295.038 31.588.492
Secure portion with quarantee letter (23.140.315) (31.588.492)
22.154.723 -
Trade Receivables
As of reporting date, details of quarantee letter taken to the receivables which are overdue and
impaired are stated below:
31 December 2018 31 December 2017
Nominal Nominal
Value Value
Quarantee letter taken 300.000 300.000
300.000 300.000
b.2) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors, which has built
an appropriate liquidity risk management framework for the management of the Group’s short,
medium and long-term funding and liquidity management requirements. The Group manages liquidity
risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by
continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial
assets and liabilities. As of reporting date, the Group have no unused borrowings to decrease liquidty
risk level
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
85
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d)
b.2) Liquidity risk management (cont’d)
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial
liabilities. The tables below have been drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the Group can be required to pay. The table includes
both interest and principal cash flows.
31 December 2018
Due dates on agreement
Carrying
Value
Cash outflows
according to
agreements
(I+II+III)
Less than 3
months (I)
Between 3-12
months (II)
Between 1-5
years (III)
Non-derivative
financial instruments
Bank loans 575.159.763 643.372.988 154.773.982 232.892.185 255.706.821
Trade payables 119.542.522 119.542.522 119.542.522 - -
Other payables 8.699.635 8.699.635 8.699.635 - -
Payables due to
personnel 5.549.666 5.549.666 5.549.666 - -
Total liabilities 708.951.586 777.164.811 288.565.805 232.892.185 255.706.821
Due dates on agreement
Derivative financial
instruments
Derivative cash exposure 1.105.535 1.105.535 158.209 947.326 -
1.105.535 1.105.535 158.209 947.326 -
31 December 2017
Due dates on agreement
Carrying
Value
Cash outflows
according to
agreements
(I+II+III)
Less than 3
months (I)
Between 3-12
months (II)
Between 1-5
years (III)
Non-derivative
financial instruments
Bank loans 389.646.552 436.114.304 142.190.566 96.255.889 197.667.849
Trade payables 112.764.236 119.509.274 119.509.274 - -
Other payables 7.395.488 7.395.488 8.726.181 - -
Payables due to
personnel 6.898.287 6.898.287 5.549.666 - -
Total liabilities 516.704.563 569.917.353 275.975.687 96.255.889 197.667.849
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
86
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d)
b.3) Market risk management
The Group’s activities expose it primarily to the financial risks of changes in foreign currency
exchange rates and interest rates.
Market risk exposures are supplemented by sensitivity analysis and stress scenarios.
There is no change in Group’s exposure to the market risks and the methods that the Group’s
measurement and management of these market risks.
b.3.1) Foreign currency risk management
Transactions denominated in foreign currencies result in foreign currency risk.
The carrying amounts of the Group’s foreign currency denominated monetary / non-monetary assets
and monetary / non-monetary liabilities at the reporting period are as follows:
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
87
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d)
b.3) Market risk management (cont’d)
b.3.1) Foreign currency risk management (cont’d)
TL Equvalents
(Fuctional
currency) US Dollars Euro Ruble CHF
1. Trade receivables 214.309 40.736 - - -
2a. Monetary Financial Assets 131.103.827 16.286.698 7.534.044 - 890
2b. Non-Monetary Financial Assets 8.523.152 882.089 - 51.534.003 -
4. CURRENT ASSETS 139.841.288 17.209.523 7.534.044 51.534.003 890
6a. Monetary Financial Assets 3.630.299 - 602.239 - -
8. NON CURRENT ASSETS 3.630.299 - 602.239 - -
9. TOTAL ASSETS 143.471.587 17.209.523 8.136.283 51.534.003 890
10. Trade Payables (5.774.040) (6.416) (901.870) - -
11. Financial Liabilities (86.806.158) (4.624.776) (10.547.646) - -
12a. Monetary Other Liabilities (2.688.351) (510.490) (450) - -
13. SHORT TERM LIABILITIES (95.268.549) (5.141.682) (11.449.966) - -
15. Financial Liabilities (35.491.589) (4.168.220) (2.250.000) - -
16b. Monetary Other Liabilities (2.260.217) (424.886) (4.137) - -
17. LONG TERM LIABILITIES (37.751.806) (4.593.106) (2.254.137) - -
18. TOTAL LIABILITIES (133.020.355) (9.734.788) (13.704.103) - -
20. Net foreign currency asset /
(liability) position (9+18) 10.451.232 7.474.735 (5.567.820) 51.534.003 890
21. Net foreign currency asset /
(liability) position of monetary items
(1+2a+5+6a-10-11-12a-14-15-16a) 1.928.080 6.592.646 (5.567.820) 51.534.003 890
23. Import 251.171.795 47.154.168 3.837.646 - 318.602
24. Export 242.851.824 47.165.825 322.102 - -
31 December 2018
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
88
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d)
b.3) Market risk management (cont’d)
b.3.1) Foreign currency risk management (cont’d)
TL Equvalents
(Fuctional
currency) US Dollars Euro Leva GBP
1. Trade receivables 930.730 246.681 61 - -
2a. Monetary Financial Assets 119.566.020 27.904.649 3.169.600 2.130 5
2b. Non-Monetary Financial Assets 1.777.443 471.233 - - -
4. Current Assets 122.274.193 28.622.562 3.169.661 2.130 5
6a. Monetary Financial Assets 1.089.435 - 241.266 - -
8. NON CURRENT ASSETS 1.089.435 - 241.266 - -
9. TOTAL ASSETS 123.363.628 28.622.562 3.410.926 2.130 5
10. Trade Payables (3.465.267) (725.054) (161.762) - -
11. Financial Liabilities (61.967.384) (10.357.511) (5.071.396) - -
12a. Monetary Other Liabilities (1.927.550) (510.490) (450) - -
13. SHORT TERM LIABILITIES (67.360.201) (11.593.055) (5.233.608) - -
15. Financial Liabilities (95.707.957) (12.504.661) (10.750.000) - -
16b. Monetary Other Liabilities (5.556.518) (1.472.569) (473) - -
17. LONG TERM LIABILITIES (101.264.475) (13.977.230) (10.750.473) - -
18. TOTAL LIABILITIES (168.624.676) (25.570.286) (15.984.081) - -
20. Net foreign currency asset /
(liability) position (9+18) (45.261.048) 3.052.277 (12.573.154) 2.130 5
21. Net foreign currency asset /
(liability) position of monetary items
(1+2a+5+6a-10-11-12a-14-15-16a) (47.038.491) 2.581.044 (12.573.154) 2.130 5
23. Import 153.088.658 22.829.899 16.819.952 - 177.518
24. Export 97.492.376 23.497.901 288.287 6.993.755 -
31 December 2017
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
89
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d)
b.3) Market risk management (cont’d)
b.3.1) Foreign currency risk management (cont’d)
Foreign currency sensitivity analysis
The Group is exposed to foreign exchange risk arising from various currency exposures, primarily
with respect to US Dollar and EURO.
The following table details the Group’s sensitivity to a 20% increase and decrease in US Dollar and
EURO against TL. 20% is the sensitivity rate used when reporting foreign currency risk internally to
key management personnel and represents management’s assessment of the possible change in foreign
exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated
monetary items and adjusts their translation at the period end for a 20% change in foreign currency
rates. A positive value below indicates an increase in profit or equity.
Due to the short and long term loans being held in foreign currency, the payments to be made in
foreign currency cause foreign currency risk in cases where the exchange rates rise against Turkish
Lira. In addition, foreign exchange rate risk arising from exchange rate changes is exposed to the
translation of foreign currency denominated assets or liabilities to Turkish Lira due to the Group's
business activities with foreign companies. Exchange rate risk is monitored and limited by analyzing
the foreign exchange position. The Group follows a policy to diversify the foreign exchange basket as
much as possible in order to manage the risk of exchange arising from future transactions and losses
and assets and liabilities.
Value increase Value decrease Value increase Value decrease
in foreign
currency
in foreign
currency
in foreign
currency
in foreign
currency
In case 20% appreciation of USD against TL
1 - USD net asset / liability 7.864.767 (7.864.767) 1.151.288 (1.151.288)
2- Amount hedged USD risk (-) - - - -
3- USD net effect (1 +2) 7.864.767 (7.864.767) 1.151.288 (1.151.288)
In case 20% appreciation of Euro against TL
4 - Euro net asset / liability (6.712.564) 6.712.564 (5.677.408) 5.677.408
5- Amount hedged Euro risk (-) - - - -
6- Euro net effect (4 +5) (6.712.564) 6.712.564 (5.677.408) 5.677.408
In case 20% appreciation of other currencies against TL
7 - Other currencies net asset / liability 938.043 (938.043) 15 (15)
8- Amount hedged other currencies risk (-) - - - -
9- Other currencies net effect (7 +8) 938.043 (938.043) 15 (15)
TOTAL (3 + 6 +9) 2.090.246 (2.090.246) (4.526.105) 4.526.105
31 December 2017
Profit / Loss Profit / Loss
31 December 2018
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
90
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d)
b.3) Market risk management (cont’d)
b.3.1) Foreign currency risk management (cont’d)
Foreign exchange forward contracts
It is the policy of the Group to enter into foreign exchange forward contracts to manage the foreign
currency risk associated with anticipated sales and purchase transactions out to 12 months.
The Group’s policy has been reviewed and, due to the increased volatility in US Dollars, it was
decided to hedge up for foreign currency forward risk arising on translation of the foreign operation.
The Group utilises a rollover hedging strategy, using contracts with terms of up to 12 months.
The following tables detail the foreign currency forward contracts outstanding at the end of the
reporting period, as well as information regarding their related hedged items. Foreign currency
forward contract assets and liabilities are presented in the line ‘Derivative financial instruments’
(shown as liabilities) within the statement of financial position (Note: 27):
Hedging
instruments
31 December
2018
31 December
2017
31 December
2018
31 December
2017
31 December
2018
31 December
2017
31 December
2018
31 December
2017
Cash Flow Hedges
Purchase of US Dollars
Less than 3 months 5,8965 - 700.000 - 4.127.600 - (158.209) -
Between 3-6 months 6,1068 - 3.600.000 - 26.325.700 - (947.326) -
- 4.300.000 - 30.453.300 - (1.105.535) -
Average rate
Nominal amount:
foreign currency
Nominal amount:
Turkish Lira
Change in fair value for
recognising hedge
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
91
28. NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (cont’d)
b.3) Market risk management (cont’d)
b.3.2) Interest rate risk management
The sensitivity analysis below have been determined based on the exposure to interest rates for both
derivatives and non-derivative instruments at the balance sheet date. For floating rate liabilities, the
analysis is prepared assuming the amount of liability outstanding at the balance sheet date was
outstanding for the whole year.
Interest rate sensitivity
Details of the Group’s interest rates of financial assets and liabilities are stated below:
31 December 2018 31 December 2017
Financial Instruments
with fixed interest rate 780.953.296 389.307.300
Time Deposits (TL) 93.482.196 14.596.674
Time Deposits (Foreign Currency) 127.224.195 71.297.901
Total Time Deposits (Note: 32) 220.706.391 85.894.575
Financial Liabilities (TL) 452.862.016 231.971.211
Financial Liabilities (Foreign Currency) 107.384.889 71.441.514
Financial Instruments
with variable interest rate 14.912.858 86.233.827
Financial Liabilities (Foreign Currency) 14.912.858 86.233.827
Total Financial Liabilities (Note: 27) 575.159.763 389.646.552
Interest Rate Position Table
As of 31 December 2018, if the variable interest rate in TL were higher / lower by 100 basis points
when all other variables remained constant, the profit before tax would have been lower/higher by TL
16.330 (31 December 2017: TL 612.267).
The Group sensivity to interest rates has increased during the current year. This is mainly attributable
to the Group’s exposure to interest rates on its floating rate borrowings.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
92
29. FINANCIAL INSTRUMENTS (FAIR VALUE DISCLOSURES)
31 December 2018
Financial assets at
amortized cost
Fair value changes to
through profit or loss
Financial liabilities
at amortized cost Carrying value Note
Financial assets
Cash and cash equivalents 236.929.104 - - 236.929.104 32
Trade receivables 347.872.584 - - 347.872.584 6
Financial investments 5.501.205 - - 5.501.205 27-32
Trade receivables from related party 56.459 - - 56.459 5-6
Other receivables from related party 172.166 - - 172.166 5-7
Other receivables 7.582.337 - - 7.582.337 7
Financial liabilities
Bank loans - - 575.159.763 575.159.763 27
Trade payables - - 119.542.522 119.542.522 6
Other payables - - 8.699.635 8.699.635 7
Derivative instruments - 1.105.535 - 1.105.535 27
Payables due to personnel - - 5.549.666 5.549.666 16
The Group management considers the carrying amount of financial assets approximate their fair values.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
93
29. FINANCIAL INSTRUMENTS (FAIR VALUE DISCLOSURES) (cont’d)
31 December 2017
Loans and receivables
(including Cash and
cash equivalents)
Financial assets at
amortized cost
Financial liabilities
at amortized cost Carrying value Note
Financial assets
Cash and cash equivalents 153.725.346 - - 153.725.346 32
Trade receivables 383.472.011 - - 383.472.011 6
Financial investments 2.028.322 2.569.965 - 4.598.287 27-32
Trade receivables from related party 149.351 - - 149.351 5-6
Other receivables 7.250.802 - - 7.250.802 7
Financial liabilities
Bank loans - - 389.646.552 389.646.552 27
Trade payables - - 112.764.082 112.764.082 6
Other payables - - 7.395.488 7.395.488 7
Payables due to personnel - - 6.898.287 6.898.287 16
The Group management considers the carrying amount of financial assets approximate their fair values.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
94
29. FINANCIAL INSTRUMENTS (FAIR VALUE DISCLOSURES) (cont’d)
Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined and grouped as follows:
The fair value of financial assets and financial liabilities with standard terms and conditions
and traded on active liquid markets are determined with reference to quoted market prices;
The fair value of other financial assets and financial liabilities are determined in accordance
with generally accepted pricing models based on discounted cash flow analysis using prices
from observable current market transactions.
Assets and liabilities measured at fair value based on valuation techniques
Some of the Group’s financial assets and financial liabilities are measured at fair value at the end of
each reporting period. The following table gives information about how the fair values of these
financial assets and financial liabilities are determined;
Financial Liabilities Valuation
31 December 2018 31 December 2017 Fair level technique
Foreign exchange forward contracts (1.105.535) - 2. level Market value
Fair value
The reconciliation of financial liabilities which valued at level 2 are stated as follows:
31 December 2018 31 December 2017
Financial liability Financial liability
recognized at fair value recognized at fair value
through profit or loss through profit or loss
Derivative Financial
Instruments
Derivative Financial
Instruments
Opening balance, 1 January - -
Total gain
-The period profit / (loss)
as reflected in the loss (1.105.535) -
Closing Balance, 31 December (1.105.535) -
30. DISCLOSURE OF OTHER MATTERS THAT MAY AFFECT CONSOLIDATED
FINANCIAL STATEMENTS SIGNIFICANTLY OR IS NECESSARY FOR CONSOLIDATED
FINANCIAL STATEMENTS TO BE CLEAR, INTERPRETABLE AND COMPREHENSIBLE
None Noted.
NUH ÇİMENTO SANAYİ A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (TL))
95
31. EVENTS AFTER THE BALANCE SHEET DATE
None Noted.
32. DISCLOSURES RELATED TO CONSOLIDATED STATEMENT OF CASH FLOWS
31 December 31 December
2018 2017
Cash on hand 92.718 135.156
Cash at banks 220.280.644 133.364.160
Demand deposits 2.505.493 35.402.845
Time deposits 217.775.151 97.961.315
Cheques and notes received 15.910.412 19.756.614
Other cash equivalents 645.330 469.416
Cash and Cash Equivalents 236.929.104 153.725.346
Less: Time deposits over 3 months maturity 2.931.240 2.028.322
Cash and Cash Equivalents as shown in cash flows 239.860.344 155.753.668
The credit risk, foreign currency and sensitivity risks of financial assets and liabilities are disclosed in
Note 28.
As of 31 December 2018 and 2017, maturities of the Group’s time deposits which are less than 3
months are stated below:
Currency Interest rate (%) 31 December 2018
TL 16,50 - 23,60 90.550.956
US Dollars 3,25 - 5,00 83.219.836
Euro 2,00 - 3,00 44.004.359
Currency Interest rate (%) 31 December 2017
TL 12,25 - 15,10 12.568.352
US Dollars 3,20 - 4,75 71.297.901
Euro 2,00 14.095.062
As of 31 December 2018, the maturity of time deposits varies between 3 and 36 days (31 December
2017: 3 to 34 days). Interest rates of time deposits are fixed.